The Revenue Commissioners v Maloney (Unapproved) [2025] IECA 85 (11 April 2025)

UNAPPROVED

THE COURT OF APPEAL

Record Number: 2023/328

Whelan J. Neutral Citation Number [2025] IECA 85

Faherty J.

Meenan J.

BETWEEN/

MICHAEL MALONEY

APPELLANT

- AND –

THE REVENUE COMMISSIONERS

RESPONDENT

JUDGMENT of Ms. Justice Faherty delivered on the 11^th day of April 2025

1. This is an appeal from the judgment of the High Court (Butler J.) (hereafter "the Judge") delivered on 12 October 2023 ([2023] IEHC 555) and the Order made on 24 November 2023 (as perfected on 4 December 2023) in a Case Stated by the Tax Appeals Commissioner for the opinion of the High Court on a point of law pursuant to s. 949AQ of the Taxes Consolidation Act 1997, as amended ("the 1997 Act). The opinion sought arose from a determination which issued on 11 January 2021 pertaining to an assessment by the respondent (hereafter "Revenue") raised, inter alia, in respect of Mr. Maloney (hereafter "the appellant") under s. 31A and/or s.31 of the Stamp Duties Consolidation Act 1999 ("the 1999 Act"). (Book of Evidence pgs. 203- 205) The key issue in dispute was whether stamp duty was chargeable on the consideration paid by the appellant for the purchase of a hotel following the service of a put option notice in January 2014. The Appeal Commissioner duly determined that stamp duty was payable under the provisions of s.31A of the 1999 Act. The Judge upheld the Appeal Commissioner's decision that stamp duty was chargeable, although, as we shall see, on different grounds to the Appeal Commissioner.

Background

2. In 2005 the appellant was a member of the Mount Falcon Partnership (hereafter "MFP" or "the Promoters"). MFP was the freehold owner of a property know as Mount Falcon Castle in County Mayo ("the Hotel").

3. On 5 December 2005 the Promoters entered into a contract with a number of third parties (hereafter "the Investors") to sell, for the purchase price of €1000, a 999-year leasehold interest in the Hotel to the Investors subject to an initial annual rent of €1500 per annum and the covenants and conditions contained in the lease (hereafter "the Hotel scheme"). The Investors did not intend to become involved in the development or operation of the Hotel, rather they were using the Hotel scheme to avail of certain tax reliefs which were available to them under statute by reason of their investment, in other words, they were availing of a "tax shelter", as described by the Judge. The lease was in fact never executed, nor intended to be, and the arrangement between the Promoters and the Investors was left to "rest in contract" for the duration of the tax life of the Hotel scheme. As such, the Investors acquired a beneficial interest in the Hotel but not the legal interest.

4. Under the terms of a "Third Put and Call Option Agreement" dated 3 November 2006, the Promoters granted the Investors a "Put Option" which if exercised, would require the Promoters to purchase all the right, title and interest of the Investors in the Hotel on the terms specified in the Option Agreement. Conversely, pursuant to the same agreement, the Investors granted the Promoters a "Call Option" under which the Promoters could require the Investors to sell (and by extension the Promoters would purchase) the Investors' right and title to the lease. In effect, on the exercise of the Option Agreement by either party, the Promoters would be required to buy back the Investors' rights in the Hotel which were resting in contract pursuant to the memorandum of sale. This was referred to in the High Court judgment as the Investors' "exit mechanism".

5. For the purposes of this judgment, save where otherwise stated, the Third Put and Call Option Agreement will be referred to as "the Option Agreement". There were in fact two other iterations of the Option Agreement, but the Court is only concerned with the Third Put and Call Option Agreement.

6. The terms of the Option Agreement required the Put Option to be exercised by means of a notice in writing to be given to the Promoters between 25 October 2013 and midnight on 25 January 2014.

7. For the purposes of financing the acquisition of their interest in the Hotel, the Investors had initially obtained finance from Anglo Irish Bank. Due to the collapse of that institution, the loan was transferred to IBRC. As the tax life of the Hotel scheme began to run down, the Investors sought to extract the loan from IBRC and secure alternative commercial financing. Ultimately, Barclays Bank Plc ("Barclays" or "the Bank") agreed to provide alternative finance in February 2013. This led to the execution of a suite of documents between Barclays and the Investors under which Barclays provided funding in return for the provision of security by the Investors.

The Facility Agreement

8. On 28 February 2013, a Facility Agreement was executed between the Investors (as borrowers), the Promoters (who provided a guarantee for the Investors' indebtedness) and Barclays. Pursuant to Clause 2 of the Facility Agreement, the Bank granted the Investors a term loan of €6m to refinance the amounts previously advanced by IBRC. The Investors were not required to make repayments on the loan during its lifetime, instead, pursuant to Clause 8, the loan, together with all interest due, was to be repaid in full at the end of the period of the tax shelter (seven years and three months after payment was made by the Investors and the Hotel opened, or "...the date on which the Borrowers [the Investors] received the full sale proceeds following the exercise of [the Option Agreement]").

9. Clause 10 of the Facility Agreement headed "Recourse" sets out as follows:

"10.1.1. Notwithstanding any other provision of any Transaction Document but save as provided for in this Clause 10.1 and in Clauses 10.2, 10.3 and 10.4, the Lender's recourse to each investor in respect of such investor's obligations under the Transaction Documents shall be limited to amounts realised in connection with the enforcement, disposal or other action taken by the Lender in respect of the Recourse Assets, any sale of any of the Recourse Assets or any payments made by any third party to an investor in respect of any contractual or other obligation owed to such Investor pursuant to the contracts which are comprised in the Recourse Assets.

10.1.2. The Lender shall not take or pursue any judicial or other steps or proceedings or exercise any other right or remedy that it may have against an Investor or against an Investor's Other Assets for the discharge of any outstanding indebtedness under the Transaction Documents and no action, proceedings, claim, levy, judgment or other process shall be taken or levied against such investor unless:

· (1) the Borrowers fail to exercise their rights under the Option Agreements when called upon by the Lender to do so pursuant to Clause 22.2.3(1) or following the exercise of such rights, the Promoters fail to comply with their obligations under the Options Agreements: and

· (2) such action, proceedings, claim, levy, judgment or other process are necessary to enable the Lender to enforce or realise the Security."

10. Pursuant to Clause 10.2.1, each Investor undertook to cooperate with Barclays "(to the extent necessary) ...in any enforcement or realisation of the investor security documents when the security has become enforceable in accordance with its term".

11. Under Clause 12.1 the Investors agreed to execute a deed of mortgage, charge and assignment over their right, title and interest in and to:

"...the Hotel and Hotel Property;,

... the Rental income and Rental account;

...the Option Agreements;

...the Promoters' Guarantee;

... and the Co-Ownership Agreement..."

in favour of the Bank.

12. Pursuant to Clause 21, the Investors entered into certain covenants. Some of those covenants extended to the Promotors who were parties to the Facility Agreement. Under Clause 21.1.6, the Investors agreed to forward to the Bank a copy of any notice issued by them under, inter alia, the Option Agreement. Pursuant to Clause 21.9, both the Investors and the Promotors agreed to "exercise their rights under the Option Agreements at the earliest opportunity and that the proceeds of such will be used in accordance with Clause 8.1".

13. Clause 22 of the Facility Agreement dealt with events of default, the occurrence of which entitled Barclays to demand immediate repayment of the full amount of the loan. Clause 22.2.3 allowed the Bank to exercise rights under the security documents, subject to, inter alia, first requesting the borrowers (the Investors) to exercise their rights under the Option Agreement, of which more anon.

The Deed of Mortgage, Charge and Assignment

14. Consistent with what had been agreed at Clause 12.1 of the Facility Agreement, on the same date (28 February 2013) as they executed the Facility Agreement, the Investors executed a Deed of Mortgage Charge and Assignment (hereinafter "the Deed") in favour of Barclays. Unlike the position relating to the Facility Agreement, the Promoters were not parties to the Deed.

15. Clause 3 of the Deed divided the security provided by the Investors into two types. Under Clause 3.1, a first fixed charge in favour of Barclays was created over the mortgaged property (i.e. the lands the subject of the 999-year lease), the Investors' ancillary rights in that property, and all receivables and rental income from the property.

16. Pursuant to the provisions of Clause 3.2, the Investors assigned and agreed to assign absolutely to Barclays, inter alia, the Option Agreement as security for the payment and discharge of their obligations to Barclays and subject to the right of redemption specified in Clause 17. Specifically, under the heading "Security Assignments", Clause 3.2 provided:

"The Mortgagors, as beneficial owners, and as security for the payment and discharge of the Secured Obligations in favour of the Mortgagee, hereby assign and agrees to assign absolutely (in each case insofar as the same are capable of assignment):

3.2.1. Each Lease;

3.2.2. The Receivables;

3.2.3 The benefit of all Ancillary Rights;

3.2.4. The Material Contracts; subject in each to case to the right of the Mortgagors to redeem this Deed as contained in Clause 17 (release of security)."

17. The "Material Contracts" for the purposes of the Deed were set out in Schedule 2 and included, at Item 2, "the Option Agreements".

18. Pursuant to Clause 3.3, on execution of the Deed the Investors were obliged to deliver to Barclays a notice in respect of each of the Material Contracts duly executed by the Investors and acknowledged by the relevant counterparty. A pro forma notice was included at Schedule 3, Part 1 of the Deed. It provided, in relevant part:

"We hereby give you notice that we have assigned to Barclays Bank plc (the Mortgagee) pursuant to a mortgage, charge and assignment entered into by us in favour of the Mortgagee on [ ] 2013 all our right, title and interest in and to the Material contracts including all monies which may be payable in respect of such Material Contracts.

With effect from your receipt of this notice, we hereby irrevocably instruct and authorise you;

1. [Following an Enforcement Event], to pay all monies due to us under or arising from the Material Contracts to the Mortgagee or to its order as it may specify in writing from time to time..."

"Enforcement Event" was defined in Clause 1.1 of the Deed as "the occurrence of an Event of Default and the exercise by the Mortgagee of its rights under Clause 22.2 of the Facility Agreement following its compliance with Clause 22.2.3(1) of the Facility Agreement".

As the Judge observed at para. 97 of her judgment, whilst the language used in a notice subsequently served pursuant to a contractual requirement would not normally assist in the interpretation of the contract itself, where the clause requires notice to be served in a particular form then the prescribed text of that form is itself part of the contract. As we shall see, the notice the Investors served on the Promoters was in the format prescribed by Schedule 3, Part 1 of the Deed.

19. Clause 5.1 of the Deed is headed "Nature of security" and provides as follows:

"Each mortgagor represents and warrants to the Mortgagee in relation to himself/herself only that he is and will at all times during the Security Period, be a lawful and beneficial owner of the Secured Assets."

"Secured Assets" was defined in the Deed as all of the Investors' assets which are the subject of the security and, therefore, included the Option Agreement.

20. Clause 6 of the Deed dealt with undertakings. Clause 6.1.1 contained a negative pledge under which the Mortgagors (the Investors) agreed not to do certain things without the prior written consent of the Bank. As provided for in Clause 6.1.1.(2), these included selling, transferring, leasing or otherwise disposing of "all or any part of their interests in the secured assets save as specifically permitted by the Transaction Documents".

21. Clause 17 provided for the release of the Security on the expiration of the security period and obliged Barclays to take whatever action might be necessary to release or reassign secured assets (at the Investors' expense). The "security period" was defined as ending on the date on which all secured obligations are unconditionally and irrevocably paid and discharged.

The Notice of Assignment

22. The suite of documentation executed on 28 February 2013 included a "Notice of Assignment of Material Contracts" which was sent by the Investors to the Promoters in respect of two of the Material Contracts, namely the Agreement for the Lease and the Option Agreement. As referred to, the Notice was in the format prescribed by Schedule 3 of the Deed and advised the Promoters of the assignment under the Deed of "all [the Investors'] right, title and interest in and to the Material Contracts..." to the Bank. It then authorised the Promoters "Following an Enforcement Event, to pay all monies due to [the Investors] under or arising from the Material Contract [to Barclays] or to its order as it may specify in writing from time to time".

The exercise of the Put Option

23. On 24 January 2014, the Investors exercised the Put Option by notice in writing to the Promoters. By exercising the Put Option, the Investors created a contract which, together with the Option Agreement, provided for the transfer of their equitable interest in the Hotel to the Promoters.

24. On 28 January 2014, the Promoters' solicitor sent an email to the Investors' solicitor in which he identified an issue which, it was said, affected the validity of the exercise of the Put Option by the Investors, namely, the assignment by the Investors of the Option Agreement to the Bank by which, it was said, the Investors had assigned all of their rights, title and interest in the Option Agreement, subject to their right to redeem. It was also said that the Notice of Assignment had rendered the assignment to the Bank absolute under s. 28(6) of the of the Supreme Court of Judicature Act (Ireland) 1877 ("the 1877 Act") "which is effective to pass and transfer the legal rights of the Investors in the Third Put and Call Option to Barclays...without the concurrence of the Investors". As such, the Promoters' contention was that the Investors could not exercise rights (the Put Option) they no longer had. The Investors were also reminded that the time period within which Barclays could have exercised its Call Option had expired.

25. There followed an exchange of correspondence between the parties' respective solicitors in which the arguments for and against an absolute assignment of the Option Agreement having occurred were teased out.

26. Notwithstanding the Promoters' solicitor having contended on 28 January 2014 that the exercise of the Option Agreement by the Investors was invalid, and repeating that contention in email correspondence on 30 January 2014, notably, the latter email concluded by stating that the Promoters " would be disposed to taking a surrender, to be effected by act and operation of law... and pay your clients the price that would have been payable had the put option been exercised" . The Investors, however, did not agree with that proposal.

27. Ultimately, the parties agreed to effect a surrender by act and operation of law "without prejudice to our respective clients' positions on the exercise of the put option".

28. On 27 February 2014, the Promoters' acquisition of the Investors' interest in the Hotel was completed following payment by the Promoters of the sum of €11,583,650.

The Stamp Duty return

29. On 21 March 2014, the solicitors for the Promoters filed a stamp duty return with the Revenue Commissioners (hereafter "Revenue") in respect of the Put Option Notice of 24 January 2014 in which they indicated that the date of execution of the relevant instrument was 27 February 2014. The return was accompanied by an expression of doubt in which it was submitted that the Put Option Notice was not in fact an instrument chargeable to stamp duty within the meaning of the 1999 Act.

30. Revenue responded on 27 February 2014 advising that the notice exercising the Put Option was chargeable to stamp duty under s.31A of the 1999 Act. This elicited a response from the Promoters' solicitors on 23 March 2016 in which they disputed Revenue's view and called on Revenue to make an assessment of stamp duty following which the Promoters would appeal. On 15 June 2017, Revenue advised that the Put Option Notice might be chargeable under s. 31 of the 1999 Act as well as under s. 31A.

31. An assessment was duly raised by Revenue for some €243,256.65 which was appealed by the Promoters, including the appellant, to the Appeal Commissioner. Although each of the Promoters appealed, only the appellant's appeal was dealt with in full at the tax appeal on the basis that the other appeals would depend on the outcome of the appellant's appeal. At the tax appeal, Revenue took the view that each of the Promoters, as members of a partnership, were jointly and severally liable for the entire of the stamp duty and each had been assessed on the full stamp duty amount.

The Appeal Commissioner's Determination

32. The Appeal Commissioner's determination issued on 11 January 2021 wherein it was found that the Investors had absolutely assigned their interest in the Option Agreement on 28 February 2013. Whilst he accepted the appellant's argument that s. 31 of the 1999 Act was not applicable, the Appeal Commissioner went on to hold that a charge to stamp duty nevertheless arose as against the Promoters pursuant to s.31A(1) of the 1999 Act on the basis that the Option Agreement, the Facility Agreement, the Deed and the Put Option together formed a "contract in aggregate" pursuant to which consideration was paid in February 2014. This finding was not made on foot of any submission made by Revenue and, ultimately, Revenue did not seek to stand over the "contract in aggregate" finding.

The Case Stated

33. In the event, both the Promoters and Revenue requested the Appeal Commissioner to state and sign a case for the opinion of the High Court pursuant to s. 949AQ of the 1997 Act. On 20 April 2021, the Appeal Commissioner certified four questions of law for the opinion of the High Court, as follows:

"1. "Was I correct in law in determining, for the reasons set out in paragraphs 52–138, that the Put Option Notice of exercise of the Option given by the Investors to the Appellants, was not a validly exercised Notice and, as such, did not give rise to a charge to stamp duty under s.31 or s.31A of the Stamp Duties Consolidation Act 1999?

2. Was I correct in law in paragraph 64 in concluding that while the Third Schedule to the Option varies the Law Society Conditions in certain respects, however General Conditions 20 and 24(a) were not altered by the special condition in this case?

3. Was I correct in law in determining, for the reasons set out in paragraphs 140–165, that the 2013 Transaction Documents, including: (A) the Facilities Agreement between (1) the Investors (as the borrowers) (2) the Appellant and others (as the promoters) and (3) the Bank, and (B) the Mortgage, Charge and Assignment between (1) the Investors and (2) the Bank, and (C) the 2006 Option Agreement between (1) the Investors and (2) the Appellant and others, together constitute in aggregate, an agreement for the sale of an estate or interest of the Investors in land (i.e. the Hotel Property) between (1) the Appellant and others (as the purchasers) and (2) the Investors (as the vendors), within the provisions of section 31A SDCA 1999?

4. Was I correct in law for the reasons set out in paragraphs 140–165 in determining that the consideration paid of €11,583,650 by MFP in February 2014 was made pursuant to an agreement within the provisions of section 31A SDCA 1999?"

34. For the reasons set out in the judgment under appeal, only questions 1 and 4 fell to be addressed by the Judge.

The High Court judgment

35. The central question for determination in the court below centred on whether there was a document which fell within the charge to stamp duty as provided for in the 1999 Act. In essence, the issue was whether the Put Option Notice created a contract for the transfer of the Investors' equitable interest in the Hotel to the Promoters. This issue was ultimately resolved by the High Court having regard to the meaning and effect of the contractual documentation which had been entered into between the Investors and the Promoters, and between the Investors and Barclays, and how the relevant statutory provisions applied to those documents when they were properly interpreted. It should be said, at this juncture, that there was no dispute between the parties as to the relevant law pertaining to the interpretation of the applicable statutory provisions under which the assessment to stamp duty was raised, those principles having been set out by the Supreme Court in Dunnes Stores v. Revenue Commissioners [2020] 3 IR 480 and Bookfinders Limited v. Revenue Commissioners [2020] IESC 60. Rather, the issue for the High Court was how the relevant contractual documentation was to be interpreted, applying the relevant principles that derived from the case law on contractual interpretation.

36. Before further consideration of the principal issue before the High Court, it is necessary to refer to the relevant provisions of the 1999 Act.

37. Pursuant to s.2(1) of the 1999 Act, any instrument specified in Schedule 1 and executed in the State shall be chargeable with stamp duty. Amongst the instruments listed in Schedule 1 are an agreement for the sale of property and a conveyance or transfer on sale. To be a conveyance or transfer on sale the document in question must have the effect of transferring the property and be reflected in a signed, written agreement.

38. The provisions of s. 31 provide, in relevant part:

"31. (1) Any contract or agreement:

(a) for the sale of any equitable estate or interest in any property, or

(b) for the sale of any estate or interest in any property except lands, tenements, hereditaments, or heritages, or property locally situated outside the State....

shall be charged with the same ad valorem duty, to be paid by the purchaser, as if it were an actual conveyance on sale of the estate, interest, or property contracted or agreed to be sold."

39. For completeness, and although, as we shall see, nothing ultimately turns on this provision for the purposes of the appeal, S. 31A of the 1999 Act (as inserted by s.78(1)(a) of the Finance Act 2013) provides:

"31A. (1) Where -

(a) the holder of an estate or interest in land in the State enters into a contract or agreement with another person for the sale of the estate or interest to that other person or to a nominee of that other person, and

(b) a payment which amounts to, or as the case may be payments which together amount to, 25 per cent or more of the consideration for the sale has been paid to, or at the direction of, the holder of the estate or interest at any time pursuant to the contract or agreement,

then the contract or agreement shall be chargeable with the same stamp duty, to be paid by the other person, as if it were a conveyance or transfer of the estate or interest in the land."

Essentially, s. 31A is designed to deal with the situation described as "resting in contract", that is where an agreement under contract to transfer land remains unexecuted for an extended or indefinite period of time.

40. As already alluded to, the core issue with which the High Court had to grapple was whether the exercise of the Put Option gave rise to a charge to stamp duty under s. 31(1)(a) of the 1999 Act. It will be recalled that there had been no formal conveyance or assurance of the Hotel, either from the Promoters to the Investors in 2005, or from the Investors to the Promoters in 2014. Hence, if the Put Option Notice was to be liable to stamp duty, as contended for by Revenue, it would be because the contract fell within s.31(1)(a) of the 1999 Act and thereby be deemed to be a conveyance on the sale of land.

41. Whilst the appellant's contention in the court below was that the Investors had very clearly assigned their interest under the Option Agreement absolutely to the Bank such as precluded any valid assignment by the Investors of their interests under the Option Agreement to the Promoters for s.31(1)(a) purposes, he also sought to argue that s.31 of the 1999 Act did not apply in any event. This was, it was said, because the Option Agreement provided that on the exercise of the option, there would be a further deed of assurance and a formal conveyance of the Hotel: hence, the Put Option notice could not be characterised as a contract for the sale of an equitable estate or interest in the property. It was also contended that s.31(1)(b) of the 1999 Act was not applicable. (That latter argument was not in fact considered by the Judge on the basis that Revenue's case was based on the applicability of s.31(1)(a)).

42. As the Judge noted, albeit advocating that s.31(1)(a) of the 1999 Act was not applicable as the purported exercise of the Put Option could not (as the appellant saw it) relate to any equitable interest held by the Investors in the Hotel at the relevant time, it was clear from evidence given by the appellant's solicitor at the tax appeal hearing that there had in fact been discussions between the parties about whether the exercise of the Put Option - which if valid would attract stamp duty– could be avoided by amending the Option Agreement to allow the Put Option to be exercised orally. Indeed, the Promoters' initial desire was to have the Option Agreement executed orally, and to effect the transfer of the Investors' interest in the Hotel to them by way of parole transaction, thereby sidestepping the requirements of s.31(1)(a).

43. Essentially, the position adopted by the Promoters and their solicitor was that the Put Option had not been validly exercised and, so, did not attract stamp duty, and that the parole transfer under the agreed alternative arrangements also did not attract stamp duty because there was no instrument involved.

44. On the other hand, Revenue's position in the court below was that the Put Option notice gave rise to a contract or agreement for the sale of the Investors' equitable interest in the Hotel property back to the Promoters and, so, s.31(1)(a) applied. It contended that it was fallacious for the appellant to focus on the requirement for a formal deed of assurance or formal conveyance given that the 2005 contract for the sale of the 999-year lease to the Investors was never completed and consequently, they never acquired a legal estate or interest in the property. According to Revenue, the Investors' rights, which "rested in contract", were equitable and could in theory have been enforced by them by way of specific performance, subject, of course, to the Promoters' right under the Option Agreement to exercise the Call Option.

45. The Judge agreed with Revenue's analysis in this regard. She opined:

"Leaving aside for the moment the question of whether the investors had assigned their rights under the option agreement to [Barclays], the exercise of the put option could never operate to divest the investors of a legal estate or interest in the hotel property since they have never taken the grant of the lease to which they would have been entitled under the 2005 contract for sale. Pending the completion of this sale, their interest in that lease remained equitable. Consequently, the only interest that could ever be transferred by them back to the promoters was an equitable interest. The investors could only transfer back the interest they held and as, that interest was equitable, formalisation of the transfer of that interest through a deed of assurance or otherwise would not convert the subject of the transaction into a legal estate." (para. 61)

46. In aid of his argument that the Investors' rights pursuant to the Option Agreement had been assigned absolutely to Barclays such that the purported exercise of the Put Option had no valid basis for the purposes of s. 31(1)(a) of the 1999 Act, the appellant pointed especially to Clause 3.2 of the Deed which, it was argued, evidenced the absolute assignment of the Option Agreement to Barclays.

47. Disputing that, the argument Revenue advanced was that it was clear from a reading of the Deed as a whole, and in the context of the related transactional documentation, that the assignment of the Investors' interest in the Option Agreement was not absolute, and that this had been, in fact, the understanding of the Investors themselves when they exercised the Put Option in January 2014.

48. Addressing this issue, the Judge noted that the starting point for consideration of the principles applicable to the interpretation of contractual documents in this jurisdiction was the decision of the Supreme Court (Geoghegan J.) in Analog Devices BV v. Zurich Insurance Company [2005] 1 IR 274 ("Analog Devices") which had approved the dictum of Griffin, J. in Rohan Construction v. ICI [1988] IRLM 373 that the "cardinal rule" in construing the contract is that "the intention of the parties must prevail", and that this intention must be ascertained objectively from the terms of the contract itself, together with any documents incorporated in it and that the words of the contract may be interpreted by reference to the surrounding circumstances. She noted that in this latter regard, Geoghegan J. had quoted Lord Wilberforce in Reardon Smith Line Ltd. v Yngevar Hansen-Tongen [1967] 1 WLR 989 to the effect that "what is to be taken as the intention which reasonable people would have had if placed in the situation of the parties". To do this, the court should "place itself in thought in the same factual matrix as that in which the parties were".

49. Geoghegan J. had also approved a then recent restatement of the relevant principles by the House of Lords in Investors Compensation Scheme Ltd. v West Bromwich Building Society [1998] 1 WLR 896.

50. The Judge summarised the principles derived from the case law in the following terms:

"The first affirms the basic principle that a court is seeking to identify the meaning of the words used as they would be understood by a reasonable person having the same background knowledge as was available to the parties at the time of the contract. The second emphasises the breadth of the factual matrix referred to by Lord Wilberforce. It can include anything which would affect how the document would be understood by a reasonable person. The third excludes from the admissible background the previous negotiations between the parties and any declaration of their subjective intent. The fourth points out that the meaning of a document may not be the same thing as the meaning of the words used. The focus is not on the dictionary definition of the words used but on how they would have been reasonably understood by the parties in the context of the relevant background. Fifthly, and finally, although the courts should not lightly assume that the parties have made linguistic mistakes in a formal document, if it is clear from the background that an error has occurred a court is not required to attribute to the parties an intention which they plainly never had." (para. 70)

51. She noted that the approval in this jurisdiction of the decision of Lord Hoffman in Investors Compensation Scheme Ltd. had given rise to some discussion as to whether it represented a shift away from a purely linguistic approach centred on the text of the document to a more broad approach focusing on the factual matrix of the parties and their business relations and designed to ensure that a court gives effect to the commercial intention of the parties - an approach which has been described as a "text in context" approach.

52. In aid of his argument that the Put Option had not been validly exercised because the Investors had assigned the Option Agreement absolutely to Barclays, such that the Investors no longer had the right to exercise the Put Option, the appellant argued that all of the criteria set out in s. 28(6) of the 1877 Act for an absolute assignment to be legally effective were met in this case and, in that regard, he relied on the decision in O'Rourke v. Considine [2011] IEHC 191. There, the requisite four conditions for an absolute assignment were characterised by Finlay Geoghegan, J. in the following terms: -

"(a) The assignment was of a debt or other legal chose in action.

(b) The assignment was absolute and was not by way of charge only.

(c) It was in writing under the hand of the assignor.

(d) Express notice in writing thereof was given to the debtors."

53. The Judge accepted that three of the four criteria were indeed met, namely, "the assignment was of a chose in action (i.e. the Investors' rights under the Option Agreement), it was in writing, and express notice of the assignment had been given to the Promoters. The remaining issue, however, was whether the assignment was absolute and not by way of charge. The appellant relied on the decision in Bovis International Inc. v. The Circle Limited Partnership [1995] 49 Cons. L.R. 12 as support for the proposition that if on its face the document purports to be an absolute assignment, then it should be treated as such unless it is ascertained that it is excluded by virtue of the other criteria in s.28(6).

54. However, the legal authority upon which the appellant placed most reliance was Bexhill U.K. Limited v. Razzaq [2012] EWCA Civ 1376. There, the borrower had assigned its receivables to its lender, a bank (coincidentally also Barclays), and the terms of the debenture provided that the borrower was to "...collect all Receivables in the ordinary course of trading for [the bank...". The borrower had initiated proceedings against one of its customers in respect of the receivables and the issue arose as to whether the borrower had the right to sue the customer because the customer asserted that whatever rights the borrower had had, constituted "receivables" and it had assigned those rights to the bank. Similar to the position here, in Bexhill, the debenture required the assignor to give notice of the assignment to the original debtor. Insofar as it can be ascertained, the notice that was served advised the original debtor that Bexhill had assigned "all its present and future right, title and interest in and to [the receivables]". (para. 17)

55. In Bexhill, in ascertaining whether or not the assignment was absolute, Aikens L.J. took as his starting point the fact that statements in the deed itself reflecting an agreement to assign all of the plaintiff's right, title and interest in the security were consistent with an absolute assignment, much as had been discussed by Mathew L.J. in Hughes v. Pump House Hotel Company Limited (No 1) [1902] 2 KB 190 although there, Mathew L.J. had cautioned as to the need to consider the document as a whole, stating:-

"In every case of this kind, all the terms of the instrument must be considered; and, whatever may be the phraseology adopted in some particular part of it, if, on consideration of the whole instrument, it is clear that the intention was to give a charge only, then the action must be in the name of the assignor; while, on the other hand, if it is clear from the instrument as a whole that the intention was to pass all the rights of the assignor in the debt or chose in action to the assignee, then the case will come within s. 25 and the action must be brought in the name of the assignee. "

56. Aikens L.J. thus observed that "whether a particular instrument creates an 'absolute assignment' or an assignment 'by way of charge only' is a question of construction of the relevant instrument taken as a whole".

57. Aikens L.J.'s ultimate conclusion was that the charge and the right to sue on foot of it had been absolutely assigned to the bank as a result of which the plaintiff in that case did not have the right to sue the defendant unless the bank were joined in the proceedings.

58. In the court below, the appellant focused on the similarity between the documentation in the present case and that in issue in Bexhill, and the fact that clauses in the documentation in Bexhill seemingly inconsistent with an absolute assignment had been successfully "explained away". He pointed to Aikens L.J.'s conclusion (at para. 55 of Bexhill) that the obligation to serve a notice of assignment was the deciding factor, and to the finding that the standard form of the letter/notice to be served (inasmuch as it had been commented on in Bexhill) was more consistent with an absolute assignment than a charge.

59. Revenue disputed the appellant's contention that the present case was on all fours with Bexhill and relied instead on the decision in Ardila Investments NV v. ENRC NV [2015] 2 BCLC 560 where it was held that the terms of the deed of assignment there indicated that the assignment was not intended to take effect as an absolute assignment. In that case, Simons J. noted that the deed of assignment "was not a well-drafted document". Whilst "the words of a legal assignment" had been used, "other provisions indicate an intention that the assignment was to take effect by way of charge".

60. The appellant argued that less weight should be given to Ardila than Bexhill given that the judgment in Ardila was that of the Queen's Bench Division, whereas Bexhill was a judgment of the Court of Appeal of England and Wales.

61. The Judge was not persuaded by this latter argument albeit she accepted that the proposition was generally correct "were there to be a difference in principle" between the judgments, which she did not find. She was satisfied, from the principles espoused both in Bexhill and Hughes (which was referenced by Aikens L.J in Bexhill) that "the documentation must be read as a whole and although the express description of an assignment as absolute must carry significant weight it is not necessarily determinative if the balance of the documentation shows that this was not the intention of the parties." (para.85) She went onto state: -

"In my view, two overarching and not entirely consistent principles can be drawn from this case law. Firstly, the court must look to the entirety of the contractual arrangements between the parties to the purported assignment of a debt or chose in action to ascertain whether, taken as a whole, the document effects an absolute assignment. Secondly, considerable weight must be giving to the language used by the parties and specifically to express language indicating an intention to assign the debt or chose in action absolutely. That said, a court is only likely to be considering the issue where the documentation is inherently inconsistent." (para. 86)

62. Having set out the approach directed by the case law, the Judge next embarked on her analysis of the transaction documents in issue in the present case. She first observed (para. 87) the unusualness of the circumstances in which the contractual documents fell to be interpreted: the dispute here was not between the Investors and Barclays (the parties to the Deed) nor indeed between the Investors, the Promoters, and Barclays (the parties to the Facility Agreement), but rather one between the Promoters and Revenue.

63. Her second observation (para. 88) was that the Promoters were contending for an interpretation (i.e. an absolute assignment of the Investors' rights under the Option Agreement to Barclays) which, on the evidence of the appellant and his solicitor at the tax appeal hearing, was not the Promoters' initial understanding of the legal relations created by the transaction documents. She noted that it was not until after the Investors had exercised the Put Option in writing that the contention was first raised by the Promoters that the Investors lacked the power to exercise the Put Option at all. Whilst the Judge acknowledged that the lateness of the argument did not preclude the interpretation now being advanced on behalf of the Promoters, she opined (per Analog Devices and Investors Compensation Scheme Ltd. v. West Bromwich Building Society) that "it does tend to suggest that a reasonable person reading this documentation with knowledge of the relevant background would have understood that the investors had retained the right to exercise the put option". (para. 88)

64. As the Judge stated, however, the matter was not a simple one "in light of the many inconsistencies in the documentation itself" (para. 89). She noted that the "key" document at issue, the Deed, related to a number of different securities some of which were subject to the creation of charges whilst other assets were "assigned" to Barclays as mortgagee. That being acknowledged, for the purposes of the requisite analysis, the Judge placed the "most reliance on terms which clearly and expressly relate to the option agreement ..." (para. 89).

65. In the view of the Judge, whilst the assignments made under the Deed conferred upon Barclays a security interest in the subject property, "it was less clear that all of them constituted an absolute assignment of the investors' interest to the Bank such that the investors no longer held any interest in the subject property" (para. 90). Although mindful that the existence of the equity of redemption was not a bar to the assignment being absolute, the Judge nevertheless regarded as "significant" Revenue's argument that the absolute assignment by the Investors of their rights under the Option Agreement would have left them vulnerable as regards compelling the Promoters to comply with the agreed exit mechanism at the end of the life span of the tax shelter. Whilst that potential difficulty had not materialised, the Judge's view was that "the possibility does give rise to serious questions as to the commercial common sense of the interpretation now contended for by the promotors". (para. 90)

66. At para. 91, she addressed the appellant's argument that if on its face the transaction document purports to be an absolute assignment, then it shall be treated as such unless it is ascertained that it is excluded by virtue of the other criteria set out in s.28(6) of the 1887 Act. The Judge was not convinced that the effect of s.28(6) was to create a strictly binary categorisation of the securitisation of debt and other legal chose in action, opining that the purpose of the sub-section appeared to be to ensure the rights of persons to which debts or choses in action have been absolutely assigned to sue on foot of the rights thereby assigned to them without requiring the consent of the assignor. She noted that the present case was not about the right to sue under the 1877 Act but rather whether the Investors retained the right to exercise the Put Option in light of the security created in favour of Barclays under the Deed.

67. At para. 92, she concluded that it was unnecessary to decide on whether s.28(6) created a strictly binary categorisation since the question at issue was "capable of being resolved based on the text of the transaction documents themselves".

68. At para. 93, the Judge addressed the three aspects of the Deed which were said by the appellant to support the contention that the Deed provided for an absolute assignment of the Option Agreement to Barclays. The first of these related to the statement in Clause 3.2 of the Deed that the "Material Contracts" (which included the Option Agreement) were assigned "absolutely" to the Bank and the distinction drawn by the appellant between the absolute assignment effected by Clause 3.2 and the charges created by Clause 3.1. The second aspect was the requirement, pursuant to Clause 3.3., on the Investors to give notice to the Promoters of the assignment of the Material Contracts. The third aspect related to Clause 17 of the Deed which required Barclays to take whatever action was necessary to "lease or re-assign and discharge secured assets from the security". The Judge, however, did not place significant weight on Clause 17 since that clause was drafted in very broad terms to cover the release of all of the security created by the Deed and not just the Material Contracts.

69. However, the Judge acknowledged that "significant regard" had to be had to the fact that Clause 3.2 of the Deed stated that the Material Contracts were to be assigned absolutely. She observed that "that statement might have settled matters were it not for the fact that such absolute assignment would be manifestly inconsistent with the other provisions of the deed and of the related facility agreement (to which the promotors were a party)" (para. 94).

70. Addressing the inconsistencies, she noted that Clause 3.2 was qualified "in that the list of documents are assigned only 'insofar as the same are capable of assignment'" (para. 95). Whilst the Option Agreements were among the Material Contracts to be assigned under Clause 3.2, in the Judge's view, they were not capable of being completely assigned to Barclays since, strictly speaking, the Investors could only assign or charge their rights under the Option Agreements and not the rights the Promoters had acquired as against the Investors. Yet, what was purported to be assigned under Clause 3.2 were the contracts themselves with no distinction being drawn between those parts which were prima facie capable of assignment and those which were not. This might, the Judge opined, have been put down to poor drafting "[were] it not for the fact that the court is asked to examine these provisions in minute detail in order to ascertain what the parties to [the] deed intended to achieve by them" (para. 95).

71. The Judge also noted that Clause 4.3(b) of the Option Agreement precluded the Investors assigning the Option Agreement without the consent of the Promoters (other than by way of security assignment). Again, as the Judge noted, the rights of the Promoters under the Option Agreement were to be exercised as against the Investors, not the Bank, notwithstanding the Investors' assignment to the Bank of the Option Agreement pursuant to Clause 3.2 of the Deed.

72. Albeit accepting that rights under the Option Agreement were in principle capable of being assigned and, as per Hughes, Bexhill and Ardila, that a statement in a deed that an assignment was absolute justified a preliminary conclusion that that was the case, in the view of the Judge, it was necessary to ask whether the Investors' rights under the Option Agreement were capable of being so assigned in light of the other terms in the Deed to which those agreements were subject. The Judge considered that examination of the other provisions in the Deed, and the related documentation, was all the more necessary since the list of documents assigned in Clause 3.2 were assigned only "insofar as the same are capable of assignment".

73. It will be recalled that in Bexhill (a decision upon which, as I have said, the appellant places particular reliance), the requirement to give notice of the assignment was regarded as a strong indicator of an absolute assignment. Addressing the requirement pursuant to Clause 3.3 to give notice to the Promoters of the assignment of the Material Contracts, the Judge noted that in Bexhill, Aikens L.J.'s rationale for the conclusion he had arrived at was based on his view that the standard form notice provided for in the contract in question was more consistent with an absolute assignment than with a charge. Here, however, Revenue had argued that the language used in the Notice of Assignment served by the Investors was materially different to that used in Bexhill. Revenue had also contended that the language of the Notice of Assignment was not consistent. On the one hand, it purported to notify the Promoters that the Investors had assigned to Barclays "all our right, title and interest in and to the material contracts including all monies which may be payable in respect of such contracts". On the other hand, there followed an instruction and authorisation requiring the Promoters to pay the monies due under the Material Contracts to Barclays only following an "Enforcement event". In the Judge's view, this suggested that "the assignment to the bank of the right to payment under the option agreement would not materialise until an enforcement event had occurred - and in this case no such enforcement event in fact occurred" (para. 98). The Judge was of the view that the inconsistencies in the terms of the Notice of Assignment served to make the requirement for notice of less weight than the equivalent requirement did in Bexhill.

74. Revenue also contended that Clauses 5.1 and 6.1 of the Deed were inconsistent with an absolute assignment of the Option Agreement. Whilst the Judge agreed that, in principle, such clauses were inconsistent with the notion of a complete assignment of the Investors' rights under the Option Agreement, she noted that those clauses applied to all the secured assets and not just the Material Contracts. Hence, she was not persuaded that the Option Agreements could not have been absolutely assigned simply by the fact that such an assignment would give rise to an inconsistency under these clauses. In this context, she considered that Clauses 5.1 and 6.1 were similar to Clause 17, in respect of which she had earlier opined did not afford particular insight into the parties' intentions as regards the nature of the security being created (para. 100).

75. The Judge did, however, regard arguments which Revenue advanced by reference to the Facility Agreement as being "significantly stronger" than those advanced in relation to Clauses 5.1 and 6.1 of the Deed. She was satisfied that the Facility Agreement and Deed "clearly comprise a part of a suite of documentation which must be read together". The Deed had created the security for the loan envisaged by the Facility Agreement and such security was specifically required by Clause 12 of the Facility Agreement. Moreover, Clause 7 of the Deed linked the enforcement of the security provided for in the Deed to the enforcement event contemplated under Clause 22 of the Facility Agreement. She opined that "[e]ven if this linkage were not so strong, I would regard the facility agreement as being very much part of the background or context within which a reasonable person would understand the terms of the deed" (para. 101).

76. The Judge next turned to Clause 22 of the Facility Agreement, upon which Revenue also relied as being inconsistent with the absolute assignment by the Investors of the Option Agreement. She noted, firstly, that under Clause 10.1.2(1) of the Facility Agreement, the Investors, as borrowers, were required to exercise their rights under the Option Agreement when called upon by the Bank to do so pursuant to Clause 22.2.3(1). In this regard, the Judge stated:

"Clearly, the investors could not exercise those rights if they had absolutely assigned them to the bank nor would any purpose be served by the bank calling upon the investors to exercise rights which had been absolutely assigned to it" (para. 102).

77. She also noted the covenants entered into under Clause 21, whereby the Investors agreed to forward to Barclays a copy of any notice issued by them pursuant to any of the Option Agreements (Clause 21.1.6.) There would, in the Judge's view, be no point in the inclusion of this Clause if the rights of the Investors/borrowers to exercise the Option Agreement and to issue a notice to that effect had been assigned absolutely to the Bank.

78. The Judge had regard to note the financial covenant entered into under Clause 21.9 of the Facility Agreement under which the Investors (and the Promoters) agreed that they would exercise their rights under the Option Agreement "at the earliest opportunity", and that the proceeds would be used to repay the loan. This Clause, the Judge said, would have been "entirely superfluous" had the Investors' rights under the Option Agreement been assigned to Barclays.

79. As regards the appellant's argument that the Clause 21 covenants were simply standard terms in a facility agreement, while that might be so as regards the negative pledge in Clause 21.4, in the Judge's view, this "is harder to see in the financial covenant under clause 21.9 where express reference is made to the investors exercising their rights under the option agreement" (para. 103).

80. The Judge went on to note (para. 104) the provisions of Clause 22.2 which provided that on the occurrence of a default by the Investors, the Bank was required, prior to enforcing its security against the Investors, to require them to exercise their rights under the Option Agreement. It was only if the Investors failed to exercise their rights (or the Promoters failed to comply with their obligations under the Option Agreement) that the Bank could proceed to exercise all of its rights under the security documents to which the Investors were a party.

81. The conclusions the Judge drew from her appraisal were expressed as follows:

"All of these clauses expressly refer to the option agreement in terms which make it clear that the parties' understanding was that the investors retained the right to exercise the put option and indeed created an obligation on them to do so if called upon by the bank. This would be superfluous if the investors no longer had any rights under the option agreement and could not exercise the put option". (para. 105)

82. In the court below, the appellant had argued that the inclusion in the Facility Agreement of provisions such as Clauses 10 and 22 which expressly dealt with the Investors' rights under the Option Agreement could be put down to human error. The Judge did not find that argument convincing. Although noting that the transaction documents were not well-drafted and included a number of inconsistencies, in the view of the Judge, "the inclusion of at least four separate provisions [in the Facility Agreement] dealing expressly with the exercise of rights under the option agreement by the investors shows that the parties intended that those rights would remain exercisable by them within the scheme of the loan and the security to be provided for it" (para. 105).

83. She went on to state:

"Therefore, the deed when read with the facility agreement, which is incorporated in it inter alia by virtue of the link between an "enforcement event" under the former and an "event of default" under the latter, can only be reasonably understood as meaning that the investors retained their right to exercise the put option under the option agreement and indeed the bank acquired a right to compel them to exercise this right in certain circumstances. Each of clauses 10.1.2(1), 21.1.6, 21.9 and 22.2.3 of the facility agreement expressly refers to the exercise by the investors of their rights under the option agreement. These are not provisions which apply generally to all the security created for the loan provided by the bank to the investors. They were specifically drafted to refer to the rights of the investors under the option agreement and prescribe how those rights were to be exercised and how the exercise of them by the investors could be enforced by the bank." (para. 106)

84. She found the continued entitlement of the Investors to exercise these rights "inconsistent with the absolute assignment of the same rights to the bank". In that circumstance she did not think that the preliminary conclusion that the Investors had absolutely assigned their rights under the Option Agreement to the Bank pursuant to Clause 3.2 of the Deed could be sustained "when the balance of the documentation is taken into account". She concluded:

"It is clear that the overall arrangement between the parties to the loan was that the rights created by the option agreement would continue to subsist as between the investors and the promotors and that insofar as the bank acquired a security in relation to those rights it was primarily a right to demand that the investors exercise the put option and followed by a right to payment of the proceeds of the transaction once the put option was exercised. The arrangement did not envisage that the bank would exercise this option directly as the assignee of those rights". (para. 107)

The answers to the Case Stated

85. In light of the Judge's analysis, it was "fairly clear" that the answer to the first question in the Case Stated was "No" and so, the Tax Commissioner was found to be incorrect in determining that the Investors had not validly exercised the Put Option. For the reasons she had previously set out, the Judge was satisfied that the interest held by the Investors in the Hotel was an equitable one. She was also satisfied that "the put option notice comprised a contract or agreement for the sale of the investors' equitable interest in the 999-year lease in the hotel property under the contract for sale" and, thus, fell under s. 31(1)(a) of the 1999 Act.

86. With regard to the second question, as the parties were agreed that it should be answered positively, the answer was "Yes".

87. The third question was whether the Appeal Commissioner's conclusion that a charge to stamp duty under s. 31A(1) on the basis of an agreement in aggregate comprising the Facility Agreement, the Deed and the 2006 Option Agreement was correct. As the parties were agreed that the Appeal Commissioner erred in this conclusion, the answer was "No".

88. Question 4 arose in the context of the Appeal Commissioner's conclusion that the transaction was chargeable to stamp duty under s. 31A. Revenue had sought to rely, by way of alternative argument, on the provisions of s. 31A(1) of the 1999 Act as applicable to an instrument executed on or after 13 February 2013, arguing that s. 31A(1) was potentially applicable to the Put Option Notice provided other conditions set out in the section were met. Its argument focused on whether the sum paid by the Promoters to the Investors, being some €30,000 less than that set out in the Investors' auditor's letter of 31 January 2014, was paid "pursuant to" a contract created for the exercise of the Option Agreement. The appellant's argument was that as the amounts were different, the amount paid could not be said to have been pursuant to the contract. Revenue's position was that the difference in amount was not material as that the price differential was "minimal".

89. As the Judge noted at para. 113, for the resting in contract provisions of s. 31A(1) to apply, at least 25% of the purchase price must have been paid pursuant to contract (as per s. 31A(1)(b). Ultimately, for the reasons she set out at para. 114, the Judge considered that "it would be difficult in principle to hold that the amount paid was not paid pursuant to the contract-and the onus of proof before the Appeal Commissioner lay on the appellant". In the event, however, her views on this topic were "necessarily obiter" since the contract to which the Appeal Commissioner had applied his reasoning was the "agreement in aggregate", and both parties had agreed that it was a legal error for him to have treated the combination of the Option Agreement, the Facility Agreement and the Deed as a stampable instrument. Given the conclusions she had reached on the applicability of s.31(1)(a) to the Put Option Notice, the Judge found no basis for also considering the agreement to have rested in contract and consequently for addressing the requirements of s. 31A(1)(b) of the 1999 Act. However, had it been necessary to do so, she would probably have answered "Yes".

The appeal

90. The appellant's notice of appeal listed some 18 grounds of appeal. These were distilled to seven discrete arguments in his written submissions wherein it is argued that the Judge:

(i) Had insufficient regard to the natural and ordinary meaning of Clause 3.2 of the Deed;

(ii) Erred in the weight she attached to the Facility Agreement in circumstances where, it is said, the court could only have regard to that document in the event of "genuine ambiguity";

(iii) Placed excessive significance on alleged inconsistencies between the wording of the Facility Agreement and the existence of an absolute assignment;

(iv) Erred in her application of purported commercial common sense to the construction of the assignment;

(v) Erred in according insufficient weight to the Notice of Assignment served by the Investors, on the basis of the words "Following an enforcement event";

(vi) Erred in having regard to the alleged initial understanding of the Promoters of the transaction documents;

(vii) Erred in appearing to accept that the decision in Ardila was an example of a clause using words of absolute assignment being disapplied in light of other provisions in a deed of assignment.

91. In oral submissions to the Court, the appellant's appeal grounds and submissions were further distilled to essentially to one overriding issue, namely, whether the Investors' interests in the Option Agreement, which entitled them to require the Promoters to purchase their leasehold interest in the Hotel, had been assigned absolutely to Barclays such that the Investors did not, therefore, have the power to validly serve the Put Option notice on the Promoters, with the consequence that no written contract came into being in February 2014 for the purposes of s. 31(1)(a) of the 1999 Act.

92. If that proved to be the case, then no charge to stamp duty could arise as the purported Put Option notice was not valid and could not have given rise to a contract within the meaning of s.31(1)(a) of the 1999 Act. Consequently, if the Court were to find that the High Court erred in law (being the requisite standard of review) in finding that the Option Agreement had not been assigned absolutely then the appellant's appeal must succeed. Conversely, if the appellant did not manage to convince the Court of an absolute assignment, the appeal must fail.

93. At hearing, counsel for the appellant concentrated on two broad issues, which, it was said, aided the contention that the Judge erred in finding that no absolute assignment of the Investors' equitable interests had been effected such that there was no valid Put Option notice for stamp duty purposes.

Those issues were:

1. The failure of the Judge to accord sufficient regard to the natural and ordinary words of the assigning clause (Clause 3.2) in the Deed together with the Judge's treatment of the Notice of Assignment.

2. The disproportionate significance attributed by the Judge to the Facility Agreement.

The scope of the appeal

94. Before addressing the issues to be decided on the appeal, it is apposite, at this juncture, to briefly set out this Court's function in appeals such as the present. As this was a statutory case stated to the High Court on points of law, the function of this Court is to determine whether the High Court erred in determining the points of law stated by the Appeal Commissioner.

95. The scope of an appeal against the determination of the High Court on a case stated on a point of law on a revenue issue has been reviewed on a number of occasions including in O'Culacháin v. McMullan Brothers Ltd [1995] 2 IR 217 wherein Blayney J. (O'Flaherty and Denham JJ concurring) distilled the following principles from the Irish and English authorities to be followed when considering a case stated:

"(1) Findings of primary fact by the judge should not be disturbed unless there is no evidence to support them.

(2) Inferences from primary facts are mixed questions of fact and law.

(3) If the judge's conclusions show that he has adopted a wrong view of the law, they should be set aside.

(4) If his conclusions are not based on a mistaken view of the law, they should not be set aside unless the inferences which he drew were ones which no reasonable judge could draw.

(5) Some evidence will point to one conclusion, other evidence to the opposite: these are essentially matters of degree and the judge's conclusions should not be disturbed (even if the Court does not agree with them, if we are not retrying the case) unless they are such that a reasonable judge could not have arrived at them or they are based on a mistaken view of the law."

It is with these guiding principles in mind that the issues in the appeal will be addressed.

Discussion and Decision

The alleged insufficiency of the weight accorded to the assigning clause, and the Judge's treatment of the Notice of Assignment

96. The appellant's primary submission is that insufficient regard was given by the Judge to the words of the assigning clause (Clause 3.2 of the Deed). He asserts that the well-established rules required her to give effect to the natural and ordinary meaning of the words of Clause 3.2, save and insofar as there was a genuine ambiguity in the natural and ordinary meaning of the words of which the appellant contends there was not. It is said that the plain words remain the starting point for the construction of commercial contracts, and often the end point. In this regard, the appellant cites Bank of Credit and Commerce International (BCCI) SA (in Liquidation) v. Ali (No. 1) [2001] UKHL 8, per Hoffman L.J., at para. 39: "The primary source for understanding what the parties meant is their language interpreted in accordance with conventional usage". This, it is submitted, is the approach also adopted in this jurisdiction, counsel for the appellant citing in this regard Analog Devices.

97. Reliance is also placed on Arnold v. Britton [2015] UKSC 36 (per Neuberger L.J.), the latter having been quoted with approval by Whelan J. in Point Village Development Ltd v. Dunnes Stores [2019] IECA 233 (at para. 69). Neuberger L.J.'s observations were also cited with approval by McMenamin J. in his dissenting judgment in Law Society of Ireland v. MIBI [2017] IESC 31 who stated (at para. 18) that commercial common sense should not "undermine the importance of language and wording of the provision sought to be construed" which was followed by Barniville J. (as he then was) in Clarion Quay Management Ltd v. Dublin City Council [2021] IEHC 811 (at paras. 106-107).

98. The appellant also draws attention to the fact that the Investors and the Bank were advised by large commercial law firms (and many of the Investors themselves were lawyers) which, it is said, further encourages an approach which focuses on the words of the assignment rather than resorting to perceived commercial common sense. In support of this, the appellant cites the dicta of Hodge L.J. in Wood v. Capita Insurances Services Ltd [2017] AC 1171, which was in turn cited by McDonald J. in Hyper Trust Limited T/a the Leopardstown Inn v. FBD Insurance Plc [2021] IEHC 79 and Whelan J. in Point Village Development.

99. The appellant requests that the Court put itself in the shoes of a court asked to determine Barclays' entitlement to exercise its rights pursuant to the Deed. It is submitted that any court would accept that Barclays was the legal assignee of the Material Contracts (including the Option Agreement). Here, it is argued that there was a legal assignment in writing effected, and a notice in writing served on the persons affected by the assignment. It is said that when viewed through the prism of Barclays' acquired rights, those factors should persuade the Court to find that there was an absolute assignment of the Put Option.

100. It is submitted that for the purposes of the Court's analysis the primary document is the Deed and that while the Facility Agreement is part of the factual matrix, it cannot be used to amend what is said to be the unambiguous language of the Deed.

101. Whether the relevant clause in the Deed was an absolute assignment or a charge is a question of contractual interpretation which is to be decided in accordance with the well-established principles pertaining to the interpretation of contracts. At this juncture, it is useful to be reminded of those guiding principles.

102. In Law Society of Ireland v. MIBI, O'Donnell J. (as he then was) restated the principles in Analog Devices which in turn had been drawn from the judgment of Lord Hoffman in Investors Compensation Scheme Limited. O'Donnell J. stated:

"(1) Interpretation is the ascertainment of the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract.

(2) The background was famously referred to by Lord Wilberforce as the 'matrix of fact,' but this phrase is, if anything, an understated description of what the background may include. Subject to the requirement that it should have been reasonably available to the parties and to the exception to be mentioned next, it includes absolutely anything which would have affected the way in which the language of the document would have been understood by a reasonable man.

(3) The law excludes from the admissible background the previous negotiations of the parties and their declarations of subjective intent. They are admissible only in an action for rectification. The law makes this distinction for reasons of practical policy and, in this respect only, legal interpretation differs from the way we would interpret utterances in ordinary life. The boundaries of this exception are in some respects unclear. But this is not the occasion on which to explore them.

(4) The meaning which a document (or any other utterance) would convey to a reasonable man is not the same thing as the meaning of its words. The meaning of words is a matter of dictionaries and grammars; the meaning of the document is what the parties using those words against the relevant background would reasonably have been understood to mean. The background may not merely enable the reasonable man to choose between the possible meanings of words which are ambiguous but even (as occasionally happens in ordinary life) to conclude that the parties must, for whatever reason, have used the wrong words or syntax....

(5) The 'rule' that words should be given their 'natural and ordinary meaning' reflects the commonsense proposition that we do not easily accept that people have made linguistic mistakes, particularly in formal documents. On the other hand, if one would nevertheless conclude from the background that something must have gone wrong with the language, the law does not require judges to attribute to the parties an intention which they plainly could not have had. Lord Diplock made this point more vigorously when he said...:

'... if detailed semantic and syntactical analysis of words in a commercial contract is going to lead to a conclusion that flouts business common sense, it must be made to yield to business common sense'."

103. Whilst not resiling from the principles espoused by O'Donnell J. in Law Society of Ireland v. MIBI, the appellant points to the dictum of Whelan J. in Point Village Development, which counsel for the appellant describes as a useful reminder of the centrality of the language used by parties to a contract. At paras. 68-69 Whelan, J. stated: -

"In cases where the language of the relevant clause is unambiguous, recent authorities make clear there must be greater emphasis on the text. In Rainy Sky S.A. v. Kookmin Bank Lord Clarke observed at para. 23 that - '... Where the parties have used unambiguous language, the court must apply it.'

104. Whelan J. went on to refer to the words of Lord Neuberger in Arnold v. Britton that "the reliance placed in some cases on commercial common sense and surrounding circumstances... should not be invoked to undervalue the importance of the language of the provision which is to be construed. The exercise of interpreting a provision involves identifying what the parties meant through the eyes of a reasonable reader, and, save perhaps in a very unusual case, that meaning is most obviously to be gleaned from the language of the provision. Unlike commercial common sense and the surrounding circumstances, the parties have control over the language they use in a contract. And, again save perhaps in a very unusual case, the parties must have been specifically focussing on the issue covered by the provision when agreeing the wording of that provision."

105. The appellant thus submits that the well-established principles of contractual interpretation required the Judge to give effect to the natural and ordinary meaning of the words of assignment and that such words remain the starting point for commercial contracts. He thus argues that the issue is how the text in context approach is to apply in the specific circumstances that pertain here, where, it is said, Clause 3.2 of the Deed refers to an absolute assignment, and where it is clear from the dicta of Lord Hoffman in Bank of Credit and Commerce International that "the primary source for understanding what the parties meant is their language interpreted in accordance with conventional usage". Hence, it is said, in a situation where Clause 3.2 is wholly unambiguous, for the Court to set that language aside there has to be a competing interpretation of Clause 3.2 but, it is said, Revenue have not pointed to such language.

106. Counsel also emphasises the distinction in the Deed between those assets that are charged (as set out in Clause 3.1) and those that are assigned (Clause 3.2) which include "the Material Contracts" of which the Option Agreement forms part. It is submitted that the effect of clause 3.2 is to assign absolutely the benefit of the Option Agreement to Barclays. That, counsel says, is crystal clear from Clause 3.2 and is effectively "the start and end point" of the matter. Whilst it is acknowledged that the words of Clause 3.2 have to be read in their context, the appellant contends that where the words are clear and unambiguous as to their meaning effect must be given to such words, as said by Lord Neuberger in Arnold v. Britton, quoted at para. 69 of Point Village Developments.

107. It is also argued that the purpose of Clause 3.3 of the Deed is clear, namely, to ensure a valid legal assignment of each of the Material Contracts for the purposes of s.28(6) of the 1887 Act. Thus, it is said, Clause 3.3 must be taken as further evidence of the intention of the parties as regards the absolute assignment of the Material Contracts which include the Option Agreement.

108. Revenue's position, on the other hand, is that whilst the language used in Clause 3.2 of the Deed is plain, nevertheless, the Judge found other parts of the Deed (including elements of Clause 3.2 itself), and indeed other related documentation, inconsistent with an absolute assignment of the Material Contracts having been effected. It submits that in embarking on her analysis of the assignment in the manner she did, the Judge was doing no more than what was required in accordance with the guidance given in Analog Devices, The Law Society of Ireland v. MIBI and indeed in Point Village, notwithstanding the appellant's contention that the dicta of Whelan J. in the latter decision supports his contention.

109. In essence, Revenue's contention is that the "text in context" approach, as explained by Clarke C.J. in Jackie Gleeson Construction Limited v. IRBC In Special Liquidation [2019] IESC 2, and indeed the other case law cited above, which involves identifying the relevant terms in the contractual documents which form part of the factual matrix and then considering their meaning and effect, is the approach which the Judge correctly adopted and which, similarly, is required to be adopted by the Court. It argues that the approach advocated by the appellant (i.e. reliance on Clause 3.2 of the Deed to the exclusion of other documentation) does not reflect the principles of contractual interpretation which the relevant case law has established.

110. I agree with Revenue. Contrary to the appellant's contention, the "start and end point" of the debate here is not confined to what Clause 3.2 contains or indeed to the Deed when read as a whole. Were the Court to determine the question at hand in the manner suggested by the appellant, to my mind, that would be entirely inconsistent with the principles espoused by O'Donnell J in Law Society of Ireland v. MIBI and indeed, as Revenue argues, the dicta of Whelan J. in Point Village Development, notwithstanding the appellant's reliance on the latter decision as support for his argument that the start and end point of the question in hand is Clause 3.2 of the Deed.

111. Whilst the appellant emphasises what is said at paras. 68-69 of Point Village Development, where Whelan J. acknowledged the importance of language, notably, Whelan J. went on to equally embrace the importance of the surrounding circumstances in construing contractual provisions, stating, first, at para. 76:

"Matrix of fact

...Lord Steyn in R. v. National Asylum Support Service stated that: -

'... Lord Hoffmann made crystal clear that an ambiguity need not be established before the surrounding circumstances may be taken into account.'"

112. Moreover, Whelan J. makes it clear that greater reliance on the text will arise only in circumstances "where the text itself is plain and unambiguous and admits of one clear meaning and then, absent anything untoward in the context which militates against the plain language of the text itself, there is a coincidence between both text and context and the Court ought to give effect to the plain language of the text." (Emphasis added) I take from those words of Whelan J. that text and context must operate in tandem and, more importantly, be construed in tandem. This is underscored by what Whelan J. goes on to say at para. 77:

"Purpose

... No contract is concluded in a vacuum. There is always a setting and a context in which it takes place. In a commercial agreement it is material that the Court should have regard to and have an understanding of the commercial purpose of the contract and that in turn presupposes an understanding of the background which framed the transaction, its context and the material circumstances which led to its conclusion". (Emphasis added)

113. The importance of considering both text and context was also emphasised in Hyper Trust Limited. There, McDonald J. observed at para. 73:

"I do not believe, however, that it ultimately matters whether one takes, as a starting point, the text of the contract, or the factual and legal backdrop against which it was concluded. What is important is that appropriate consideration should be given both to the text and the context. Although the decisions of the Supreme Court in Marlan Homes v. Walsh [2012] IESC 23 and ICDL v. European Computer Driving Licences Foundation [2012] 3 I.R. 327 suggest that a court should commence with an examination of the words used in the contract, the subsequent decisions in the MIBI case (in particular para. 22 of the judgment of O'Donnell J. and paras. 10.4, 10.9 and 10. 11 of the judgment of Clarke J.) and in Jackie Greene Construction v. IBRC [2019] IESC 2 seem to me to have adopted a less dogmatic approach. The relevant principle was explained as follows by Lord Hodge (in a manner consistent with the views of Clarke and O'Donnell JJ.) in Wood v. Capita Insurance Services Ltd [2017] AC 1173 at pp. 1179–1180:

'12. ...To my mind once one has read the language in dispute and the relevant parts of the contract that provide its context, it does not matter whether the more detailed analysis commences with the factual background and the implications of rival constructions or a close examination of the relevant language in the contract, so long as the court balances the indications given by each.'" (Emphasis added)

114. It is against the aforesaid legal backdrop therefore that the first argument the appellant advances, i.e. that the Judge erred in not giving greater weight to the words used in Clause 3.2 of the Deed, falls to be assessed. I turn now to those arguments.

115. As he had in the High Court, in advocating the primacy of Clause 3.2 of the Deed the appellant relied on Bexhill. He asserts that the approach of Aikens L.J. supports his argument that the words of the assigning clause should have been the court's "starting point" in assessing whether the assignment effected an absolute assignment of the Investors' rights under the Option Agreement and ought to have led to the "preliminary conclusion" that an absolute assignment had been effected. He points especially to the assignment clauses in the debenture document in issue in Bexhill which, it is said, are couched in very similar language to that used in Clause 3.2 of the Deed. The relevant clauses in Bexhill read as follows: -

"3.1.1 As a continuing security for the payment of the Secured Obligations ... [Bexhill] assigns and agrees to assign absolutely in favour of [Barclays] all of [Bexhill's] rights, title, interest and benefit in the Receivables.

3.1.2 As a continuing security for the payment of the Secured Obligations, [Bexhill] hereby with full title and guarantee assigns and agrees to assign absolutely in favour of [Barclays] all of its rights, title, interest and benefit in and to each Relevant Contract and all collateral and rights there under."

116. Clause 3.3 of Bexhill, headed "Notice of Assignment" provides: -

"Immediately upon execution of this Deed (and immediately upon the obtaining of any Insurance or the execution of any Relevant Contract after the date of this Deed) [Bexhill] shall:

3.3.1 in respect of each Relevant Contract, deliver a duly completed notice of assignment to each other party to that Relevant Contract (with a copy to [Barclays]), and use its best endeavours to procure that each such executes and delivers to [Barclays] an acknowledgement, in each case in the respective forms set out in Schedule 2 (Forms of notice to and acknowledgement by party to Relevant Contract) (or in such other form as [Barclays shall agree]; ..."

117. The question which was required to be answered in Bexhill was framed by Aikens L.J. at para. 42 as being: "whether the terms of the BB Debenture, taken as a whole assign, i.e. transfer "absolutely" to Barclays certain existing property, including "things in action", or whether the terms create an assignment by way of charge only." At para. 48 of his judgment Aikens, L.J. went onto state: -

"The starting point on the nature of the security granted to Barclays must be clause 3. On the fact of clause 3.1.1 Bexhill "assigns and agrees to assign absolutely in favour of [Barclays] all of its rights, title, interest and benefit in the Receivable", which is consistent with the assignment being absolute in the sense discussed above. Mr Rathmell concedes this much. So, based on this clause alone, once the 'thing in action' constituted by the right to sue on the Charge came into existence, that would be the subject of an equitable assignment in favour of Barclays. Does that preliminary conclusion have to be modified in the light of the other provisions of this Debenture and the BBFA and by looking at the transaction as a whole to see the commercial sense of it, as Mr Rathmell argued?"

Ultimately, having discounted, for stated reasons, a range of other clauses in the debenture which it had been argued militated against an absolute assignment having occurred, Aikens L.J. found the wording of clause 3.1.1 "simple and clear", stating, "on the face of it the clause assigns absolutely to Barclays all existing Receivables and when future Receivables come into being that they will be the subject of an absolute assignment in equity." Essentially, he found none of the provisions in the other clauses touched upon what had been created by clause 3.1.1.

118. Here, however, the issue is not as straightforward. Firstly, the inclusion in Clause 3.2 of the Deed of the words "(in each case insofar as the same are capable of assignment)" serve to distinguish the present case from Bexhill, in a material regard, in my view. As indeed the appellant acknowledged, those words are absent from Clause 3.1 of Bexhill. As the Judge observed, the Option Agreement (as one of the Material Contracts to be assigned under Clause 3.2) was not capable of being completely assigned to Barclays: the Investors could only assign-or charge- their rights and interests under the Option Agreement to Barclays and not the rights the Promoters acquired as against them under the same agreement.

119. Despite the inclusion in Clause 3.2 of the words "(in each case insofar as the same are capable of assignment)", the appellant seeks to argue that that did not detract from an absolute assignment having been effected by Clause 3.2. In my view, however, this contention fails to take note of the requisite principles of construction established by the case law. As the Judge correctly stated, "it is necessary to ask whether the investors' rights under these option agreements were capable of being so assigned in light of the other terms to which those agreements were subject in the deed and the related transaction documents" (emphasis added)-the Judge there quite obviously employing the interpretation tools advocated in Law Society of Ireland v. MIBI, Point Village, Jackie Gleeson Construction and Hyper Trust Limited and, indeed, as advocated by Aikens L.J. himself in Bexhill at para. 45 where he reflected on the importance of construing the document "as a whole"-an aspect of Aikens L.J.'s analysis which, as Revenue points out, is not engaged with at all by the appellant in his reliance on Bexhill. Hence, whilst a statement in a deed that an assignment was absolute "justifies a preliminary conclusion that that is the case", it is, as the Judge acknowledged, nevertheless necessary to examine the other provisions of the Deed to see whether the parties intended the assignment to take effect as an absolute assignment.

120. It will be recalled that in Bexhill, ultimately, it was clause 3.3 of the debenture document that proved decisive for Aikens L.J. He put it thus at para. 55 of his judgment:

"To my mind the deciding factor is the obligation of Bexhill in clause 3.3 of the BB Debenture to give a notice of assignment to other parties to 'Relevant Contracts' and the terms of that notice, as set out in schedule 2 of the BB Debenture. The standard form of letter is very much more consistent with an absolute assignment rather than one by way of charge only. Further, the standard form of letter stipulates expressly that 'all rights and remedies in connection with' any agreement that is made between Bexhill and its consumers (such as RSA) and 'all proceeds and claims arising from' such an agreement are also assigned. The phrases 'in connection with' and 'arising from' are broad. To my mind they would include RSA's rights on the Charge and the right to sue Mr Razzaq in respect of it."

As referred to at para. 17 of Bexhill, Schedule 2 to the deed in issue there contained a standard form of letter for a notice of assignment. At para. 117 Aikens L.J. states that the letter sent in Bexhill was "in that form".

121. In the present case, the Judge observed, at para. 97, that part of Aikens L.J.'s rationale for the notice of assignment being a strong indicator of an absolute assignment was based on the standard form notice under the contract in question being more consistent with an absolute assignment than a charge. The Judge then looked to the language employed in the Notice of Assignment served on the Promoters which, on Revenue's argument, was materially different to that used in Bexhill. For the reasons set out at para. 98 of her judgment, she found the language used in the Notice of Assignment inconsistent with an absolute assignment of the Option Agreement, observing that the language was, on the one hand, absolutely assigning the Material Contracts to the Bank whilst, on the other hand, containing an instruction and authorisation which required the Promoters to pay monies due under the Material Contracts to the Bank but only following an "Enforcement Event". She found that the inconsistencies in the Notice "means that the fact that there was a requirement to serve notice carries less weight than the equivalent requirement did in Bexhill" (para. 98).

122. The appellant takes issue with the distinction effectively drawn by Judge between the Notice of Assignment in issue here and that in issue in Bexhill. Whilst acknowledging that there is no reference in the judgment in Bexhill to what was contained in the notice of assignment actually served -Aikens L.J. having only quoted from the form of notice attached to the debenture (although he says that the letter served was in that form), the appellant says the Judge went too far in highlighting the distinction between the notices since it could not be said conclusively what was actually contained in the notice of assignment that was served in Bexhill. He posits that, in reality, "it was perfectly possible that the notice of assignment in Bexhill contained the words 'following an enforcement event'" (the appellant thereby seemingly contending that the likely presence of such words had not impeded Aikens L.J. in finding that an absolute assignment had been effected).

123. The appellant further contends that, in any event, the Judge accorded undue significance to the words "following an Enforcement Event" as appears in Clause 1 of the Notice of the Assignment. He argues that the import of the Notice is that the Investors were advising the Promoters that they had transferred all their rights, including monies payable under the Material Contracts, to the Bank. It is said that the direction given by the Investors, pursuant to Clause 1 of the Notice of Assignment, to the Promoters to pay all monies due to them under the Material Contracts to the Bank following an enforcement event does not detract from an absolute assignment of the Investors' interest in those contracts to the Bank having occurred.

124. I cannot agree with these submissions. In Bexhill, the deciding factor, for the purposes of determining that an absolute assignment had been effected, was the very peremptory language utilised in the notice of assignment at issue there in circumstances where there was no suggestion that the peremptory language was in any way modified or curtailed by other words in the assigning clause, or elsewhere in the debenture. That is not the position in the present case. Here the Notice of Assignment (the service of which is provided for in Clause 3.3 of the Deed) contains the Investors' instruction and authorisation to the Promoters "Following an Enforcement Event, to pay all monies due to [the Investors] under or arising from the material contracts to [the Bank] or to its order as it may specify in writing from time to time". (Emphasis added)

125. In furtherance of his argument that the Judge afforded too much significance to the words "Following an Enforcement Event", the appellant relies on the decision of the English High Court in Mailbox (Birmingham) Ltd v. Gailford Try Construction Ltd [2017] EWHC 67 (HCC) where, as was the case in Bexhill, it was held that there had been an absolute assignment of the contract in issue to a lender. Like Bexhill, Mailbox involved a defendant claiming it could not be sued for breach of contract because the claimant had mortgaged the contract to a bank.

126. The notice of assignment served in Mailbox stated, in material part:

"Following the Security Trustee's notification to you that the Enforcement Date has occurred all payments by you to us under or arising from the Contract should be made to the Security Trustee or to its order as it may specify in writing from time to time."

The appellant contends that the notice of assignment at issue in Mailbox was for all practical purposes the same as the notice of assignment at issue in the present case.

127. Notwithstanding that the requirement for payment was only to be triggered by notification of the "Enforcement Date" occurring, O'Farrell J. found that the notice of assignment was consistent with an absolute assignment of the contract having been effected. Her rationale for so doing was set out at para. 37. She stated:

"The requirement in clause 5.1 for Mailbox to give notice of an assignment under clause 3.3, and the content of the form of notice, are more consistent with an absolute assignment rather than a charge. In particular, the form of notice of assignment at Schedule 9 provides that all remedies under the relevant contract, and all rights, interests and benefits accruing to Mailbox under a relevant contract, belong to the Security Trustee. That is the language of an absolute assignment, rather than a conditional charge."

128. At para. 38, O'Farrell J. addressed the proviso at para. 3.3 of the notice of assignment which entitled Mailbox to exercise all rights it had assigned. She stated:

"The proviso in clause 3.3 entitling Mailbox to exercise all rights assigned does not make the assignment conditional as the premise on which permission is given by the Security Trustee is that the rights have been assigned. There is also specific reference to the possibility of re-assigning such rights to enable Mailbox to exercise the same. Clause 3.3 refers to the right of Mailbox to redeem such assignment on full payment or discharge of the liabilities but an equitable right of redemption does not preclude an absolute assignment: Hughes v. Pump House Hotel...per Cozens-Hardy LJ p.196."

129. Whilst the type of language that appears to have impelled O'Farrell J. to conclude that an absolute assignment had taken place is not to be found in the Notice of Assignment in the present case, the appellant nevertheless argues that there is nothing of substance in the case to distinguish it from Mailbox and, so, urges the Court to find that the position here is on all fours with Mailbox. He points to the fact that the Deed has an absolute assignment clause (Clause 3.2) and the Notice of Assignment refers to the Investors' full rights and title to the Material Contracts having been assigned to the Bank (albeit it is accepted that the Notice of Assignment goes on to say that payments due under the Material Contracts are to be paid to Barclays "after an Enforcement Event"). The appellant contends that Revenue has not succeeded in distinguishing the language used in the Notice of Assignment from the language used in similar documents in Mailbox save to assert that there is no reference to "absolutely" in the Notice of Assignment in issue here and that the said Notice does not assert that the assigned assets "belong" to Barclays. The appellant's contention is that those factors are not sufficient for a finding that there was not an absolute assignment of the Option Agreement.

130. The first thing to be observed is that in Mailbox, O'Farrell J. makes no reference at all to the notice of assignment being conditional on the "enforcement date" occurring, rather, as we see, her focus is on the fact that the notice provided that "all remedies under the relevant contract, and all rights, interests and benefits accruing to Mailbox under a relevant contract belong to the Security Trustee". (Emphasis added) This was clear from the provisions of the notice of assignment actually served in Mailbox which was in the form of Schedule 9 to the debenture. For completeness, the relevant clause provided:

"(4) All rights, interests and benefits whatsoever accruing to or for the benefit of ourselves arising from the Contract belong to the Security Trustee and no changes may be made to the terms of the Contract nor may the contract be terminated without the Security Trustee's consent..." (Emphasis added)

O'Farrell J. referred to that wording as "the language of an absolute assignment rather than a conditional charge".

131. In my view, it is noteworthy that the notice document at issue in Mailbox specifically stated that the assets assigned "belong" to the Security Trustee, a factor which is absent from the Notice of Assignment at issue here: no such possessive language is found in the Notice of Assignment (or for that matter in the Deed).

132. The appellant also cites Mailbox as support for the proposition that neither the presence in the assigning clause of provision for an enforcement event/enforcement date nor provision having been made for the assignor to exercise the rights and interests provided for in the assigned contract, preclude the notion of an absolute assignment. He points to the fact that pursuant to clause 3.3.4 of the debenture in issue in Mailbox, the assignor/chargor was entitled to exercise all rights not otherwise mortgaged or charged under clause 3.1 "until the occurrence of an Event of Default", and to the fact that there was provision for the Security Trustee to reassign such rights so as to enable the assignor/charger to exercise same. He cites the dictum of O'Farrell J. at para. 38 of Mailbox which, it is said, makes it clear that the inclusion of the words "until the occurrence of an Event of Default clause 3.3.4 of the debenture, "does not make the assignment conditional as the premise on which permission is given by the Security Trustee is that the rights have been assigned".

133. As regards this argument, again, I would observe that, here, the position is different. Firstly, not only does Clause 1 of the Notice of Assignment instruct and authorise the Promoters to pay all monies due to the Investors to the Bank "following an Enforcement Event", but, unlike the position that obtained in Mailbox, there is no provision in the Notice of Assignment that the assets "belong" to the Bank. Absent the type of possessive language found in clause 3.3 of the debenture in Mailbox, to my mind, the inclusion of the words "following an Enforcement Event", which is found not just in Clause 1 of the Notice of Assignment but also in Clause 3, can reasonably be taken as meaning that for the time being, the Investors/Mortgagors still retain rights under the Material Contracts, including their rights under the Option Agreement. Indeed, as the Judge opined, the wording of the Notice of Assignment suggests that the Investors were retaining their right to operate the Option Agreement up and until an "Enforcement Event" occurred. Whilst the appellant (relying on Mailbox) contends that the reference to the "Enforcement Event" is not fatal to his argument that an absolute assignment had occurred, it bears repeating that in Mailbox, as indeed O'Farrell J. noted, the express clause in the deed of debenture entitling the chargor/assignor to exercise all rights assigned pro tem up and until there was an "Event of Default" was followed by an express provision whereby the lender (the Security Trustee) committed to reassigning any such rights to the extent necessary to enable the chargor to exercise such rights, which, it appears, O'Farrell J. took as underscoring the fact that the rights in question had been assigned absolutely to the Security Trustee. On the other hand, here, as we will come to see, pursuant to Clause 22.2.3(1) of the Facility Agreement, Barclays were obliged to first request that the Investors exercise their rights under the Option Agreement before Barclays could exercise their rights under the security. This aspect is further discussed below.

134. To my mind, the salient conclusion to be taken from Mailbox is that the language used in the relevant provisions in issue there pointed to the assigned rights as belonging to the lender (the Security Trustee). However, the language and terms of the Notice of Assignment here do not admit of such a conclusion either when the Notice of Assignment is read in the context of the Deed as a whole, and, more pertinently, in the context of other documentation (the Facility Agreement) which I will shortly address.

135. To my mind, here, everything points to the fact that it was envisaged that the Investors/Mortgagors could avail of their rights under the Option Agreement up to the time of an enforcement event. That being the case, the Notice of Assignment, when read in the context of the Deed as a whole and the surrounding circumstances, has features which are incompatible with an absolute assignment of the Investors' rights in the Option Agreement having been effected, as indeed the Judge rightly recognised.

136. It will be recalled that Clause 5.1 of the Deed provided that each of the Investors/ Mortgagee represented and warranted to the Bank/ Mortgagee that that "he is and will at all times during the Security Period, be a lawful and beneficial owner of the Secured Assets". By Clause 6.1 of the Deed, the Investors agreed that they would not do any of the following, namely, create or permit to subsist any security interest in any of the secured assets or sell, transfer, lease, license, lend or otherwise dispose of all or any part of their interest in the secured assets, save as specifically permitted by the transaction documents without the prior consent of the Bank.

137. Insofar as Revenue points to Clause 5.1 of the Deed as inconsistent with an absolute assignment of the Option Agreement, the appellant's submission is that Clause 5.1 should be read in conjunction with Clause 3.2, so that the parameters of Clause 5.1 fall to be construed as meaning that the Investors, when assigning their rights, were merely assuring the Bank that they were the owners of the secured assets. Furthermore, the appellant disputes that Clause 6.1 negatived the contended for absolute assignment of the secured assets or that the clause was otherwise inconsistent with an absolute assignment.

138. Asked by the Court as to what the temporal reference "at all times" in Clause 5.1 was meant to convey if not that the Investors continued to be the beneficial owners of the secured assets, the appellant acknowledged that the inclusion of "at all times" was difficult to reconcile with the argument he advances and agreed that on its face, Clause 5.1 appeared inconsistent with an absolute assignment of the Option Agreement. He submitted, however, that the Court should read into Clause 5.1 the words "save and except the assets assigned in clause 3.2.4" of the Deed.

139. Revenue submits that the contents of Clause 5.1 and Clause 6.1 suggest that the Investors still have a beneficial interest in the Option Agreement notwithstanding the purported absolute assignment of the Material Contracts provided for in Clause 3.2. It also says that the provisions of the negative pledge provided for in Clause 6.2 beg the question as to why such a pledge was provided for if there was already an absolute assignment of the Investors' rights in the Option Agreement given that the Option Agreement falls under the umbrella of the secured assets.

140. Whilst the Judge was of the view (with which I concur) that the clauses in question, insofar as they applied to the Option Agreement, were inconsistent with the notion that the Investors had absolutely reassigned their rights under the Option Agreement to the Bank, she was not persuaded that they provided any particular insight into the parties' intention as far as the security created in respect of the Option Agreement was concerned since the clauses applied to all of the security created by the Deed. Therefore, these clauses were not the determining factor in the Judge's ultimate conclusion. That being the case, as far as this appeal is concerned, I do not see how the appellant can cavil with the approach the Judge adopted as regards these clauses.

141. On the other hand, as we see from the judgment, the Judge regarded Revenue's arguments in relation to the Facility Agreement as "significantly stronger" than those canvassed in respect of Clause 5.1 and Clause 6.1 and, ultimately, she was satisfied that the Deed when read in conjunction with the Facility Agreement could only "be reasonably understood as meaning that the investors retained their right to exercise the put option under the option agreement and indeed the bank acquired a right to compel them to exercise this right in certain circumstances". I will turn shortly to the Facility Agreement but before doing so, I will address other arguments canvassed by the appellant and Revenue.

Alleged wrongful invoking of commercial common sense

142. It will be recalled that at paras. 72-73 of her judgment the Judge remarked that there was no need to inquire as to what insight "business common sense" might bring to bear on the task of construing the contract. The appellant does not take issue with this and indeed says the Judge was correct to say as much. However, he asserts that (impermissibly) the Judge went on (at para. 90) to have regard to commercial common sense by regarding as "significant" Revenue's argument that an absolute assignment of the Investors' rights under the Option Agreement would have left them very vulnerable as regards compelling the Promoters to comply with the agreed exit mechanism. He asserts that the Judge's observations were in circumstances where no evidence had been given as to the commercial context, such that it was wrong, therefore, for the Judge to reach conclusions based only on Revenue's submissions.

143. In aid of his argument, the appellant cites Arnold v. Britton, where Lord Neuberger, at paras. 17-23 of his judgment, emphasised seven factors which he considered arose from the case law discussed at para. 15 of his judgment. At factor four, Lord Neuberger acknowledges that "commercial common sense is a very important factor to take into account when interpreting a contract" although he cautions that a court should be slow to reject the natural meaning of a provision as correct simply because it appears to be imprudent. According to the appellant, by what she said at paras.72-73 of her judgment, the Judge was (properly) treating the concept of commercial common sense as irrelevant to the construction of the contract in question, but he says that having done so, it was then inconsistent for her to opine as she did at paras. 90.

144. Before I address the appellant's complaint, the first thing to be observed is that in Arnold v. Britton, Lord Neuberger was clearly acknowledging the importance of commercial common sense when interpreting a contract, something which the Judge here brought to bear on the issue before her, although, as she explained, not in the sense of being tasked with ascertaining the meaning of the contract in the context of a dispute between to the parties to it with a view to its enforcement, but rather in the context of examining the contract with a view to what fiscal consequences might flow from it where those fiscal consequences affected a third party (para. 73).

145. Contrary to the appellant's argument, I see no inconsistency in the Judge's approach. In my view, her observations at paras. 72-73 have be read in the very particular context that presented here, where it was not the parties to the Deed who were before her but rather where the Deed was required to be construed at the behest of a third party (the appellant) as to what fiscal consequences might flow from the contract by dint of the Investors having assigned absolutely their rights under the Option Agreement in circumstances where those fiscal consequences affected only the Promoters.

146. In my view, the Judge's dicta at paras. 72-73 did not preclude her observation, at para. 90, that the concept of an absolute assignment would have left the Investors vulnerable vis a vis the agreed exit mechanism from the Hotel scheme, and that from a "commercial common sense" point of view, the Promoters' contention of an absolute assignment of the Option Agreement having taken place gave rise to "serious questions". In my view, in opining as she did, the Judge was doing no more than abiding the dicta of Lord Neuberger in Arnold v. Britton that "commercial common sense is a very important factor to take into account when interpreting a contract".

Revenue's reliance on Clause 4.3(b) of the Option Agreement

147. As part of its argument that no absolute assignment of the Option Agreement took place, Revenue points to the fact that pursuant to Clause 4.3(b) of the Option Agreement, the Investors were not entitled to assign their rights thereunder (other than by way of security assignment) unless the transferee acceded to the Option Agreement. Revenue points out that there was no novation by Barclays in respect of the transfer of the Investors' interests in the Hotel property and submits that all of this points to the Investors not being permitted to effect an absolute assignment of their interests in the Option Agreement.

148. As the Judge observed at para. 108, novation of the Option Agreement would be required for any transfer by the Investors other than by way of a "security assignment". Having opined that it was not entirely clear whether a "security assignment" in the context of Clause 4.2(b) meant a charge or some other form of assignment which is less than a charge, and in light of her not having found it necessary to reach a definite conclusion on whether s. 28(6) of the 1877 Act provides for a strictly binary classification such that a security assignment must necessarily be either an absolute assignment or a charge, the Judge did not consider it necessary to further comment on the argument.

149. As Revenue's argument pursuant to Clause 4.2(b) did not feature as part of the Judge's rationale for the answer she gave to the first question, I too will refrain from further consideration of this submission, it being sufficient, in my view to have regard to the matters upon which the Judge placed reliance upon when construing the Deed. I turn, therefore, to the Judge's treatment of one of those matters, namely, the Facility Agreement.

Alleged over reliance on the Facility Agreement

150. The second limb of the appellant's overarching argument on the appeal relates to the approach of the Judge to the Facility Agreement. It is common case that the Judge relied on a number of clauses in that document to find that there could not have been a total assignment of the Investors' rights in the Material Contracts including the Option Agreement.

151. The appellant says that the "bedrock" of the Judge's decision was that various provisions in the Facility Agreement were inconsistent with an absolute assignment of the Option Agreement. In advocating that the Judge erred in law in relying on the Facility Agreement, counsel for the appellant, in the first instance, harkens back to what he describes as the clear meaning of the Deed when viewed as a whole and submits that as the meaning of the Deed was clear, there was no need to construe the Deed in a business sense or have regard to the commercial sense of the transaction whether by reference to the Facility Agreement or otherwise. In this regard, counsel cites Cherry Court v. Revenue Commissioners [1995] 2 I.R. 212 and points to the dictum of Lord Clarke in Rainy Sky SA v. Kookmin Bank [2011] UKSC 50 to the effect that business common sense is to be applied where there are two possible constructions of the language used. However, "where the parties have used unambiguous language, the court must apply it" (para. 23). It is submitted that, here, Clause 3.2 admits of no competing construction: the words are clear. Moreover, it is said, Revenue has not put forward an alternative interpretation. Consequently, the role of the Court, it is said, is to construe the Deed as a whole and to do so utilising the approach outlined in Rainy Sky.

152. The difficulty with the above submissions, in my view, is that, as the Judge found (and which I have upheld), contrary to the appellant's argument, the assignment clause in the Deed itself contained elements inconsistent with an absolute assignment of the Option Agreement having been effected (without even having had regard to any other document or indeed the commercial sense of the transaction). That being the case, I fail to see how the dictum of Lord Clarke assists the appellant.

153. The appellant describes as "striking" the extent to which the Judge focused on the words of the Facility Agreement when construing the assignment provisions in the Deed. Whilst he acknowledges that the Facility Agreement was a "background document" which is admissible in construing the assignment, he contends that the Judge ascribed undue significance to it and thereby understated the primacy of the assignment clause (Clause 3.2). It is argued that, as a matter of substance, the Judge did not accord the requisite primacy to the words of the assignment and appeared to regard herself as engaged in an exercise of construing the words of the Facility Agreement as much as the language of the assignment, an approach which the appellant says, "allowed the tail to wag the dog".

154. I cannot accept these submissions. The exercise in which the Judge engaged was entirely in accordance with the guidelines provided by Law Society of Ireland v. MIBI and Point Village Development, and indeed Bexhill the case upon which the appellant places so much reliance (Aikens L.J. there being satisfied to look at the transaction "as a whole" when construing the relevant assignment clause). As the Judge observed at para. 85 of her judgment: "It is clear from both Bexhill and Hughes that the documentation must be read as a whole and although the express description of an assignment as absolute must carry significant weight it is not necessarily determinative if the balance of the documentation shows that this was not the intention of the parties". The Judge's observation undoubtedly had in mind Aikens L.J.'s dictum at para. 46 of Bexhill that "[to] determine what types of security the parties agreed that Barclays should have in respect of the 'secured obligations' it is necessary to examine closely the terms of the Debenture itself, albeit in their commercial context, then ask: what type of security did the parties intend thereby to create in favour of Barclays, when extending the loan facilities to Bexhill of £5 million." (Emphasis added) I will deal shortly with the "commercial context" that pertained in this case.

155. In aid of his argument, the appellant looks to the first factor identified by Lord Neuberger in Arnold v. Britton (upon which the appellant relies), namely that "commercial common sense and surrounding circumstances...should not be invoked to undervalue the importance of the language of the provision which is to be construed". Whilst that principle is undoubtedly correct, here, given the inconsistency present in Clause 3.2, as identified by the Judge, there can be no suggestion that the Judge's recourse to the Facility Agreement was for the purpose of undermining the assignment clause. Nor, given that inconsistency, can it be said that the Judge gave too much weight to the decision in Ardila Investments NV, as the appellant alleges. Indeed, I do not believe that the Judge placed any undue weight on that decision in light of paras. 85-86 of her judgment. The Judge's focus was on the dicta of Aikens J. in Bexhill that the debenture had to be read as a whole. In Bexhill, the "preliminary conclusion" of an absolute assignment was not modified because the remaining terms of the debenture document were consistent with an absolute assignment, which, as I have said, is not the situation here given the inconsistency in Clause 3.2 itself. Here, as I have previously said, the Judge was careful to acknowledge that significant weight had to be afforded to the words of the assignment clause. However, given the inconsistency with which she was presented, there can be no suggestion that the Judge was somehow undermining the assignment provisions in the Deed when looking to the Facility Agreement and to the relevant surrounding circumstances.

156. To my mind, for the reasons set out above, the appellant has no valid basis for his submission that the English authorities regarding the issue of absolute assignments reflect that the courts focus "almost exclusively" on the words of assignment or debenture at issue rather than those of any accompanying document. Furthermore, contrary to the argument the appellant advanced, I find nothing in Bexhill, or more importantly, in the relevant Irish case law, which required the Judge to identify an ambiguity in Clause 3.2 of the Deed in order for the court either to consider the Deed as a whole, or to consider the surrounding circumstances, including the Facility Agreement.

157. I note that Clause 1.2.1 of the Deed referred specifically to the Facility Agreement. It provided:

"Unless the context otherwise requires or this Deed provides otherwise, a term which is defined in the Facility Agreement shall have the same meaning (or be subject to the same construction) in the Deed. If there is any conflict or inconsistency between the terms of the Deed and the Facility Agreement then the terms of the Facility Agreement or vice versa shall prevail."

Albeit the final sentence in Clause 1.2.1 leaves much to be desired in terms of clarity, the import of Clause 1.2.1, suggests at the very least that the Deed should be read with reference to the Facility Agreement.

158. Being satisfied that the Judge did not err in having regard to the Facility Agreement in considering whether an absolute assignment of the Option Agreement had been effected, I turn now to the specific criticisms which the appellant has in respect of the Judge's findings as regards the Facility Agreement.

159. Whilst the appellant accepts that "several provisions in the Facility Agreement proceeded on the basis that the Investors retained an interest in the Option Agreement" (para. 56 of the appellant's submissions), he nevertheless criticises the High Court for having "insufficient regard to the possibility that these may have been nothing more than infelicities in the drafting of the Facility Agreement". I agree with Revenue that this is a wholly unsupported and hypothetical submission that sits uneasily with the appellant's argument that the High Court should have taken account of the fact that the parties had been "advised by large and well-known commercial law firms" such that the documents were "prepared with the assistance of skilled professionals".

160. I also agree with Revenue that it is somewhat misleading for the appellant to suggest that the Judge considered the Facility Agreement before the provisions of the Deed (thereby suggesting undue prominence having been afforded to the Facility Agreement) in circumstances where it is abundantly clear from the operative part of the High Court judgment that the Judge commenced her consideration of the issue before her by looking to the Deed and the relevant assignment provisions before turning to the Facility Agreement. There is also no substance in the argument that the Judge treated the words of the Deed and the Facility agreement of "equal significance" when it is clear from para. 94 of the judgment that the Judge was mindful that "significant regard [had] to be paid to the fact that the deed itself states that the material contracts are to be assigned absolutely".

161. The appellant also complains that the Judge had insufficient regard to the fact the references in the Facility Agreement to the Investors' rights under the Option Agreement made sense where the Facility Agreement was being entered into before Clause 3.2 of the Deed was entered into and the Notice of Assignment delivered to the Promoters. Whilst acknowledging that Clause 1.1 of the Deed says that the security assignment was being entered into on or about the same date as the Facility Agreement, the appellant contends that the Facility Agreement does not stipulate the date of execution of the Deed and he submits that it was perfectly possible "in theory" that there would be a time gap "possibly even a substantial one" between the execution of the Facility Agreement and the Deed.

162. The first observation I would make as regards this submission is that as a matter of fact both documents were executed on the same day. Not unreasonably, Revenue makes the point that the appellant, who was a signatory to the Facility Agreement, and on whom the onus of proof rested, could have addressed this issue when he gave oral evidence before the Tax Appeal Commissioner. He did not do so. In any event, as Revenue also points out, the High Court made no finding as to the timing of the execution of the documents, or whether timing was a relevant issue; the focus of the Judge was that the Deed and the Facility Agreement "clearly comprise a part of a suite of documentation which must be read together". In stating as much, as I have already alluded to, the Judge was doing no more than adhering to the guidance provided by the case law as to how the intention of parties to a contractual transaction is to be ascertained, which is "objectively from the terms of the contract itself" (para. 69) and from the "factual matrix" as referred to by Lord Wilberforce in Investors Compensation Scheme Ltd (para. 70).

163. Turning, therefore, to the Facility Agreement, there are myriad clauses (Clauses 10.1.2, 10.2.1, 10.4.1, 21.1.6, 21.9, 22.2 and 22.2.3) in the Facility Agreement which, to my mind, are inconsistent with an absolute assignment of the Option Agreement having occurred. As the Judge observed, each of the Clauses 10.1.2(1), 21.1.6, 21.9 and 22.2.3 of the Facility Agreement "expressly refers to the exercise by the investors of their rights under the option agreement". Those provisions were not ones which apply generally to all of the security created by the loan provided by the Bank to the Investors but were, as the Judge said, "specifically drafted to refer to the rights of the investors under the option agreement and prescribed how those rights were to be exercised and how the exercise by them by the investors could be enforced by the bank" (para. 106). This is especially true of Clause 21.9 whereby the Investors (the borrowers) and the Promoters agreed that the Investors would exercise their rights under the Option Agreements at the earliest opportunity and that the proceeds of such would be used to discharge their indebtedness to the Bank.

164. Furthermore, Clause 22.2.3 provided that in the event of a default the Bank may "exercise the rights and remedies of mortgagee or secured party under the Security Documents provided that:

1. The Lender shall, unless each of the Promotors are bankrupt, prior to enforcing its security under the Security Documents to which the Investors are a party, first request the Borrowers to exercise their rights under

(i) the Option Agreements in accordance with the terms thereof or

(ii) the Promotors Loan Guarantee and to apply the proceeds of payments thereunder in or towards repayment of the Loan and all other amounts then due hereunder;

2. If in the opinion of the Lender, the Borrowers have failed to exercise their rights under the Option Agreements as required pursuant to Clause 1 above and having exercised such rights, the Promotors have failed to comply with their obligations under

(i) the Option Agreements or

(ii) the Promotors Loan Guarantee resulting in the amount paid by the Promotors thereunder being insufficient to enable the Borrowers to repay all amounts due to them under the Finance Documents, the Lender may subject to Clause 10 immediately proceed to exercise all of its rights under the Security Documents to which the Investors are a party." (Emphasis added)

165. Revenue submits that this is particularly inconsistent with the view that there has been an absolute assignment of the Option Agreement, a submission with which I agree.

166. In essence, the approach of the Judge here was a text in context approach. In the course of her analysis, she identified the various links between the Deed and the Facility Agreement, as indeed is clear from para. 25 of her judgment where she stated: "The link between the deed and the facility agreement is evident from a number of clauses not least the definition of 'enforcement event' as the occurrence of an event of default and the exercise by the bank of its rights under clause 22.2 of the facility agreement following compliance with clause 22.2.3(1) of same." She again referred to the link between the two documents at para. 106, noting that the Facility Agreement was incorporated in the Deed "by virtue of the link between an 'enforcement event' under [the Deed] and 'an event of default' under the [Facility Agreement]".

167. In my view, regard must also be had to email correspondence of 29 January 2014 between the Investors' and the Promoters' respective solicitors which refers to Clause 22.2.3 of the Facility Agreement, the email being part of the requisite "factual matrix", in my view. I accept Revenue's submission that the email shows that the Investors were actively involved (in 2013) in varying and/or modifying what was presumably an otherwise standard facility agreement provided by the Bank with the objective of devising a strategy to ensure that they would still have rights under the Option Agreement even if in default to the Bank. The email states, inter alia, as follows:

"Clause 22.2.3 of the Facility Agreement provides that, where an Event of Default has occurred, before taking any enforcement action the Lender will require the Borrowers to exercise the rights under the Option Agreements. This Clause was the subject of extensive negotiation with Barclays. The Investors wanted to avoid any type of enforcement action by Barclays and it was agreed by all parties that the Investors would have a "clean" exit from the Transaction by exercising their rights under the Option Agreement. You will note that the Clause refers to Barclays calling on the Investors to exercise the option rather than Barclays exercising the option".

168. As counsel for Revenue says, had there been an absolute assignment of the Option Agreement to the Bank, one would have expected provision to have been made in the Facility Agreement, or otherwise, for the re-assignment to the Investors of the Option Agreement so as to allow them to exercise their Put Option in the event of a default on their part. As I have earlier remarked, unlike the position in Mailbox, there was no such provision made for any reassignment of the Option Agreement by the Bank to the Investors in the event of default by the Investors. Rather, there is provision, simpliciter, in Clause 22.2.3 for the Bank, before taking any enforcement action, to require the Investors to exercise their rights under the Option Agreement, all of which is consistent with the Investors having retained their interest in the Option Agreement and inconsistent with those interests having been assigned to the Bank pursuant to Clause 3.2 of the Deed.

Overview

169. For all the reasons set out above, the appellant's contention that that the Judge adopted an overly expansive approach to the requisite interpretation exercise and that the Court should have regard only to Clause 3.2 of the Deed is not consistent with the well-established principles of contractual interpretation as evidenced by Analog Devices which is the touchstone of modern contractual interpretation in this jurisdiction. As that case and the relevant jurisprudence that followed it directs, in construing the contract the function of the court is to put itself in the shoes of the person who has all the background knowledge. Here, the Investors, who executed the Deed in favour of the Bank, were aware or must be assumed to have been aware of the contents of the Facility Agreement executed on the same day as the Deed. Indeed, Clause 1.2.1 of the Deed bears witness to this. That being the case, the Judge was correct to find that the Deed ought to be read in conjunction with the Facility Agreement as part of the matrix of fact to which Lord Hoffman at principle 2 in Investors Compensation Scheme Limited adverts.

170. In my view, the Judge was correct to find that there were sufficient features in the text of the Deed, the Notice of Assignment and the Facility Agreement to allow the court to say that the Investors had retained their right to exercise the Put Option under the Option Agreement.

171. The analysis conducted by the Judge was thorough and she correctly identified the applicable principles of interpretation and then applied them to the case in hand. Having regard to the applicable principles, the Judge correctly looked at Clause 3.2 of the Deed, and to the Deed read as a whole, the Notice of Assignment and the Facility Agreement.

172. For the reasons set out above, the appellant has not established any error of law on the part of the Judge. Accordingly, I would dismiss the appeal and affirm the Order of the High Court.

Costs

173. The appellant has not succeeded in his appeal. It would seem to follow that Revenue should be awarded its costs. If, however, any party wishes to seek some different costs order to that proposed they should so indicate to the Court of Appeal Office within 28 days of the receipt of the electronic delivery of this judgment, and a short costs hearing will be scheduled, if necessary. If no indication is received within the 28-day period, the order of the Court, including the proposed costs order, will be drawn and perfected.

174. As this judgment is being delivered electronically, Whelan J. and Meenan J. have indicated their agreement therewith and the orders I have proposed.

Result: Appeal Dismissed and affirm order of the High Court

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You are here: BAILII >> Databases >> Irish Court of Appeal >> The Revenue Commissioners v Maloney (Unapproved) [2025] IECA 85 (11 April 2025) URL: https://www.bailii.org/ie/cases/IECA/2025/2025IECA85.html Cite as: [2025] IECA 85

Irish Court of Appeal