Irish Court of Appeal

THE COURT OF APPEAL

CIVIL

UNAPPROVED

NO REDACTION NEEDED

 

Neutral Citation Number: [2025] IECA 67

Court of Appeal Record Number: 2024/71

 

 IN THE MATTER OF A CASE STATED PURSUANT TO SECTION 949AQ TAXES CONSOLIDATION ACT 1997

 

Whelan J.

Faherty J.

Meenan J.

 

 

 

BETWEEN/

 

SEAN FLAHERTY

 

APPELLANT

 

- AND -

 

 

THE REVENUE COMMISSIONERS

 

RESPONDENT

 

 

 

JUDGMENT of Ms. Justice Máire Whelan delivered on the 21^st day of March 2025

 

 

Introduction  

1.              This is an appeal from the judgment of the High Court (Nolan J.) delivered on 23^rd November 2023 and Order made on 8^th December 2023 (perfected on 30^th January 2024) in a Case Stated by the Tax Appeals Commissioner on 16^th December 2022 for the opinion of that court on a point of law pursuant to s.949AQ of the Taxes Consolidation Act 1997, (as amended) (TCA 1997).  The opinion sought arose from a determination which issued on 6^th October 2022 pertaining to assessment of Capital Gains Tax (CGT) raised in respect of  Mr. Flaherty (the Appellant) by the Revenue Commissioners on 27^th April 2018 for the tax year 2015.  The key issue in dispute was the "date of disposal" for CGT purposes of the Appellant's fishing vessel Glór na dTonn together with the vessel's associated capacity tonnage and in particular whether the said disposal took place, as the Appellant contended, after 1^st January 2016 (the date when Entrepreneurial Relief of 13% was introduced)  entitling him to claim relief on CGT liability pursuant to s.597AA of the TCA.  Eligibility for the said relief required disposal to take place on or after 1^st January 2016. 

Background

2.              The Appellant, a fisherman of Rossaveal, County Galway, was at all material times the beneficial owner of the fishing vessel Glór na dTonn with a related capacity-tonnage held on foot of a licence previously granted by the Sea Fishing Authority (SFA).  On 21^st October 2015 he entered into a Memorandum of Agreement with Antarctic Polyvalent Fishing Company (the purchaser) for the sale and disposition of the vessel and its related capacity for consideration of €5,000,000.  The agreement is succinct. The First Schedule identifies the vessel and its related gross tonnage of 230gt.  The consideration was payable in three separate tranches.  On the basis of the documentation considered by the High Court the key dates under the agreement included the following:

·                21^st October 2015 the Memorandum of Agreement for the sale of the vessel and its related capacity tonnage was executed by the parties.

·                17^th December 2015 the first tranche of consideration of €65,000 fell to be paid.

·                21^st December 2015 the Bill of Sale was signed acknowledging payment of €5,000,000, although it seems that the payment was not made on that date.

·                11^th January 2016 a sea fishing boat licence issued by the Department of Agriculture, Food and the Marine to the purchaser in respect of the vessel. The vessel was also registered in the purchaser's name.

·                19^th January 2016, the second tranche of €4,930,000 million fell due for payment to the vendor.

·                10^th February 2016, final tranche of €5,000 was due to be paid to the vendor.

 

3.              If the "date of disposal" for CGT purposes is found to have occurred prior to 1^st January 2016 the Appellant is not entitled to benefit from entrepreneurial relief which would have reduced the CGT rate to 20% for gains up to €1million.  The Appellant and the Revenue Commissioners were unable to reach agreement on the issue of entitlement to Entrepreneurial Relief and on 27 April 2018 the Revenue Commissioners issued a Notice of Assessment to CGT which  assessed the Appellant's CGT based on a sale date of the 21^st October 2015 resulting in entrepreneurial relief not being deemed available.  Thus, the dispute centres on whether the "disposal date" for CGT purposes is located in the year 2015 or 2016.

4.             S.542(1)(a) of TCA defines "disposal" for CGT purposes thus:

"Section 542 TCA 1997 Time of disposal and acquisition.

(1)(a)  Subject to paragraph (b) and subsection (2), for the purposes of the Capital Gains Tax Act, where an asset is disposed of and acquired under a contract, the time at which the disposal and acquisition is made shall be the time at which the contract is made (and not, if different, the time at which the asset is conveyed or transferred).

(b) Where the contract is conditional (and in particular where it is conditional on the exercise of an option), the time at which the disposal and acquisition is made shall be the time at which the condition is satisfied."

Determination of the Appeal Commissioner

5.               The Determination of the 28^th  September 2022 is of central importance. The Commissioner reached the following findings of fact based on the evidence before him:

(1)     That the Appellant entered into a Memorandum of Agreement for the sale of his vessel together with the related capacity-tonnage on 21^st October 2015;

(2)      The Appellant submitted his CGT computation to the Revenue Commissioners which asserted that the date of disposal occurred in the 2016 tax year;

(3)     A dispute thereby arose between the Appellant and the Respondent as to whether the sale had occurred in the 2015 or 2016 tax years;

(4)     The vessel together with the related capacity-tonnage were required to be disposed of together for the sale to be effective;

(5)     A number of steps were required to be undertaken to ensure that the vessel together with its licence and fishing rights were transferred to the purchaser;

(6)     If those steps were not fulfilled it was likely that the Memorandum entered into  between the parties would have become frustrated.

6.              In his Determination the Commissioner considered the documentation furnished by the Appellant including the Memorandum of Agreement, Bill of Sale and sundry correspondence with the Department of Agriculture Food and the Marine including a letter dated 11^th January 2016. This was addressed to the purchaser confirming that the Licensing Authority had decided to grant a non-operative licence pursuant to s. 4 of the Fisheries (Amendment) Act 2003 (as inserted by s.97 of the Sea Fisheries and Maritime Jurisdiction Act 2006). This step enabled the purchaser to re-register the vessel as a sea-fishing boat. Following issuance of the said licence, which was only valid for registration purposes and for a period of three months from the date of issuance, the purchaser was then eligible for an operative licence provided application for same was made within the three-month timeframe.  A Certificate of Registration of an Irish Fishing Vessel and a Sea Fishing Boat Licence in respect of the vessel ultimately issued to the purchaser on 11^th January 2016.  The Appellant contended that the events above occurring after 1^st January 2016 were proof that "disposal" occurred in 2016.

7.             The Appeal Commissioner considered the import of various terms in the Memorandum of Agreement of 21^st October 2015.  He noted that Clause 3 provided:

"3 COMPLETION:

3.1 Completion of this agreement shall take place following:-

a. receipt by the vendor of the balance purchase monies;

b. receipt by the purchaser's solicitor of the documentation set out in the Second Schedule hereto;

and completion shall take place on the      day of       2015, subject to the provisions of clause 1.2 hereof.

On completion the vendor shall deliver the vessel to the purchaser at Killybegs."

In fact, there is no "clause 1.2" in the Memorandum. Neither was any date specified in the executed Memorandum as representing the completion date. It was simply left blank.

8.             In his analysis of same , the Commissioner had regard to two aspects; firstly he considered that the agreement itself was poorly drafted and that there were a number of errors contained therein.  He considered that the kernel of the problem revolved around the application of the Second Schedule of the agreement.  The Second Schedule is explicitly referred to in clause 3.1.b (cited above).  It provides as follows:

"SECOND SCHEDULE

1.      Up to date transcript of the register;

2.      Certificate of registry;

3.      Bill of sale;

4.      Discharged marine mortgage;

5.      Up to date copies of vendors licences from MSO;

6.      Explanation of all acts appearing on searches against the vendor and against the vessel;

7.      All other documents in the vendor's control and possession relating to the vessel;

8.      Satisfactory survey;

9.      Confirmation of fishing entitlements."

 

9.             The Appellant sought to attach particular weight to item 9 in the Second Schedule  "Confirmation of fishing entitlements".  By its operation clause 9 required the vendor to furnish confirmation of the fishing entitlements associated with the vessel.  It was contended on behalf of the Appellant that performance of clause 9 was in effect a prerequisite to any contract coming into existence between the parties in the first place  since pending furnishing of same completion of the contract could not take place.  Compliance by the vendor with clause 9 of the Second Schedule was said to be analogous to a "subject to planning permission" condition in a Contract for Sale of real property.  Thus, he argued this requirement should be treated by the Revenue Commissioners as a condition precedent to any binding contract ever coming into existence. The argument posited on behalf of the Appellant contended that a court could imply conditions into a contract for it to be effective. Emphasis was placed on the fact that the Appellant was disposing of his vessel together with the attached fishing rights: "these were inalienable from one another and as such the sale of the vessel could not occur unless the associated fishing rights were also transferred."  Reliance was placed on various maritime legislation including the Merchant Shipping Act 1894, the Mercantile Marine Act 1955, the Maritime Safety Act 2005, the Sea Fisheries Jurisdiction Act 2006,  the Merchant Shipping (Regulation of Ships) Act 2014, together with sundry EU Fishing Policy Directives including EU Council Reg. No. 1224/2009 and EU Council Reg. No. 1380/2013 as supporting a proposition that "for the sale to complete regard was required to that legislation and the procedural steps involved."  (para.19 of Determination)

10.          It was contended by the Appellant that after the vessel was transferred to the purchaser three key conditions had to be satisfied before the sale could complete including:

(1)          Completion of a Bill of Sale,

(2)          A Certificate of Registration,

(3)          The Transfer of the Sea Fishing Licence to the purchaser. 

11.           It was posited that since any of these individual requirements could be frustrated at any stage by third parties this in effect meant that the Memorandum of 21^st October 2015 was a conditional contract.  The Appellant argued that the Memorandum created conditions precedent and accordingly s.542(1)(b) TCA 1997 was applicable.  The said provision (vide para.2 ante) states that where a contract is conditional the time at which the disposal is made shall be the time at which the condition is satisfied.  The Appellant contended that since the conditions in the Memorandum were not satisfied until 11^th January 2016 the latter date was the operative date of  "disposal" and thereby the Appellant was entitled to benefit from the entrepreneurial relief in respect of CGT pursuant to s.597AA TCA 1997. 

12.         The Appeal Commissioner attached some weight to the decision of L'Estrange v Graucob [1934] 2 KB 394 considering it "of assistance as it states that a person who signs a contract may not generally dispute his agreement to any of the terms which it contains.", whilst noting that  it was not binding in this jurisdiction (paras. 42,44 of Determination).  He noted that the sale of the vessel ultimately completed and agreed with Revenue's submissions that the requirements identified in Schedule 2 of the Agreement "were procedural rather than conditional in nature and given this position does not find that the wording of the Memorandum gives rise to any express conditions." (para. 44) He also observed that "... had the agreement not completed for one reason or another, there would have no disposal for CGT purposes and the date of disposal would not be an issue." (para. 44)  It was emphasised that the Memorandum did not contain any "subject to" or similar contingent conditions".  It was noted that "the language used in the Memorandum and the actions of the parties up to the closure of the sale reinforce the Commissioner's belief that the Memorandum does not contain any express conditions."(para.46)  He cited the criteria set out by the Privy Council decision in BP Refinery (Western Port) PTY Limited v . Shire of Hastings [1978] 52 ALJR 20 for implying a term into a contract:

"1. it must be reasonable and equitable;

2. it must be necessary to give "business efficacy" to the contract, so that no term will be implied if the contract is effective without it;

3. it must be so obvious that "it goes without saying";

4. it must be capable of clear expression;

5. it must not contradict any express term of the contract."  (para. 47)

The determination noted that " the business efficacy test was confirmed in a more recent UK Supreme Court case of Marks and Spencer Plc v. BNP Paribas Securities Services Trust Company (Jersey) Limited and Another [2015] UK SC 72 where it confirmed that "a term will only be implied if a reasonable reader of the contract, knowing all its provisions and surrounding circumstances at the time the contract was made, would consider the term to be so obvious as to go without saying or to be necessary for business efficacy."

13.         The Determination held that "...the only tangible effect...is that the Appellant would be liable to pay less CGT owing to the availability of Entrepreneur's Relief." He held that "this outcome would not satisfy the business efficacy test."   He concluded that the Memorandum of 21^st October 2015 "did not contain any express or implied conditions regarding the sale and as such that the relevant date of the disposal is 21^st October 2015. As this finding places the disposal into the 2015 tax year it follows that entrepreneur's relief must be denied to the Appellant and the assessment in the sum of €130,000 is upheld."

The case stated

14.          At the behest of the Appellant the guidance of the High Court was sought on the following issues of law pursuant to s.949AQ TCA 1997:

1.       Did the Commissioner err in his interpretation that the Memorandum of Agreement did not contain any express/implied conditions regarding the sale?

2.       Did the Commissioner err at paragraph 38.5 of his determination in stating that one of the steps required under the Memorandum was to: "ensure licence and fishing rights were transferred to the purchaser" rather than "be surrendered by the vendor and the purchaser given equivalent fishing rights"? 

If so, does this have any impact on the Memorandum being conditional in nature?

3.       Did the Commissioner err in holding that matters affecting the sale requiring third-party consent did not amount to express or implied conditional terms of the Memorandum?

 4.      Did the Commissioner err in determining that if the procedural steps were not fulfilled this would have caused the Memorandum to become frustrated?

5.       Did the Commissioner err in determining that the doctrine of business efficacy was not applicable in the instant case?

6.       Did Commissioner err in his interpretation that the Memorandum of 21^st October 2015 was not a conditional contract?

The High Court - the Arguments

15.           A key argument before the High Court related to whether the Memorandum of Agreement of 21^st October 2015 was conditional and if so whether the provisions of s.542(1)(b) of the 1997 TCA would deem the "date of disposal" to be the date on which the said conditions were satisfied.  If so, it was contended that the Appellant was then entitled to claim the benefit of entrepreneurial relief pursuant to s.597AA of the TCA which came into operation on 1^st January 2016.  The Appellant asserted that the date of fulfilment of the contended-for conditions in the contract was the 11^th January 2016 which was the correct date of "disposal"  which entitled the Appellant to entrepreneurial relief.  The Respondent claimed that the appropriate "date of disposal" for the purposes of CGT assessment was 21^st October 2015 and accordingly the Appellant was not entitled to entrepreneurial relief.  In argument before the High Court the Appellant contended that the Appeal Commissioner had erred in his analysis and conclusion.  It was contended that completion of the agreement could not have occurred until all the relevant documentation was furnished by the Appellant to the purchaser and statutory regulations were complied with including approval from the Sea Fishery Authority.

16.          In the High Court the Appellant relied on the decisions in O'Connor v. Coady [2004] IESC 54 and  Hand v. Greaney [2004] IEHC 391, both of which pertained to the sale of land.  Reliance was also placed on the decision in Mullane v. Riordan [1978] ILRM 73 concerning a contract for the sale of land subject to planning permission being obtained.   

17.          The Appellant contended that the Commissioner had erred in law in failing to apply the "business efficacy test" and that it could be inferred from the language of the contract that the acquisition of fishing rights were "part and parcel" of the transaction.

18.         On behalf of the Revenue the focus of argument was on the "date of disposal" for CGT purposes and whether the Agreement could reasonably be characterised as conditional in nature such that the provisions of s.542(1)(b) TCA were engaged.  It was contended that the starting point for ascertaining  of the correct date of disposal was the date of the contract not the date of transfer of the asset.  It was noted that s.542(1)(b) allows for an exception only where a contract was conditional.   It was argued that the Appellant had entered into an unconditional, binding and enforceable contract on 21^st October 2015, reliance being placed on the decision in Parway Estates Ltd v. Commissioners of Inland Revenue [1958] 45 TC 135 which had held that a contract for the sale of shares was unconditional even though the transferor was required to perform various obligations pursuant to the terms of sale.  The Respondent contended that a conditional contract is one subject to a condition precedent not a condition subsequent.  Reliance was placed on an excerpt from Revenue Commissioners' Manual to support this contention:

"In the case of a conditional contract the contract is not effective until the condition is satisfied. For Capital Gains Tax purposes, the time of disposal in these circumstances is the date on which the condition is satisfied. For example, in the case of a chargeable asset which is the subject of an option, the date of disposal is the date on which the option is exercised. The option itself is of course disposed of on the date on which it was granted. Similarly, contracts where the disposal and acquisition is subject to obtaining planning permission or loan approval are conditional contracts. The time of disposal is the date the condition is satisfied, e.g. when loan approval is obtained rather than the date the contract is signed and not when the contract is closed." (part 19-01-15)

Finding of the High Court

19.          In the judgment delivered on 23^rd November 2023, the Court agreed with the Appeal Commissioner that the contract was not well drafted.  It noted (para. 13) that the Bill of Sale, an instrument under seal, signed on 21^st December 2015 acknowledged payment in the sum of €5 million " ... in relation to 64 shares in the ship, her boats and appurtenances. The Appellant, as the transferor, had acknowledged the transfer had taken place. The Appellant also covenanted that the ship was free from encumbrances and that he had the power to transfer. The document was signed under seal."

20.          Nolan J. rejected the Appellant's arguments that the sale of the vessel was similar in its terms to that of a property sold "subject to planning permission" (para.56). He noted the absence of conditional words in the agreement. "Nowhere does the agreement say that the sale is subject to the obtaining of any of the documents set out in the schedule."  He considered that "The issue as to when the contract became enforceable may well be a matter for the parties to the contract, but it is not an issue which the Commissioner should take into consideration in interpreting the tax code.".  He held that "business efficacy" did not arise for consideration by the Commissioner. He concluded:

"The findings of preliminary fact found by the Commissioner should not be disturbed since there is evidence to support them. I agree with the inferences he found from primary facts which are mixed questions of fact and law. I do not believe he adopted a wrong view of the law and therefore I do not think they should be set aside. I do not believe his conclusions were based upon a mistaken view of the law nor do I believe that the inferences he drew were ones which no reasonable judge could draw. I do not believe that the Commissioner's conclusions should be disturbed since I do not believe that a reasonable judge could not have arrived at them or that they are based upon a mistaken view of the law." (para.62)

21.          Having considered s.542 of the TCA, he concluded that the section made a clear distinction between a conditional requirement and an act required to be done before an asset is conveyed or transferred.  He found guidance in the decision of Murphy v. O'Toole & Sons Ltd & Anor [2014] IEHC 486, for the proposition that for a contract to be conditional, the condition must be expressed between the parties.  Nolan J. answered the questions thus:

1.         Did the Commissioner err in his interpretation that the Memorandum of Agreement did not contain any express/implied conditions regarding the sale?  No.

2.         Did the Commissioner err at paragraph 38.5 of his determination in stating that one of the steps required under the Memorandum was to: "ensure licence and fishing rights were transferred to the purchaser" rather than "be surrendered by the vendor and the purchaser given equivalent fishing rights"?  Yes.

If so, does this have any impact on the Memorandum being conditional in nature? No.

3.       Did the Commissioner err in holding that matters affecting the sale requiring third-party consent did not amount to express or implied conditional terms of the Memorandum? No.

 4.      Did the Commissioner err in determining that if the procedural steps were not fulfilled this would have caused the Memorandum to become frustrated? No.

5.       Did the Commissioner err in determining that the doctrine of business efficacy was not applicable in the instant case ? No.

6.       Did Commissioner err in his interpretation that the Memorandum of 21^st October 2015 was not a conditional contract? No.

 The Appellant appealed the decision advancing eleven grounds as follows:

Grounds of Appeal

(1)           The trial judge erred in holding that the contract for the sale of the vessel was not a conditional contract within the meaning of s.542(1)(b) of the TCA.

(2)          The judge erred in holding that the conditions for the sale of the vessel in the contract (if any) were satisfied prior to 1^st January 2016.

(3)          The judge erred in stating "There were no conditional words used in this agreement".

(4)          The judge erred in holding that the time when the contract became enforceable was not an issue which the Tax Appeal Commissioner should consider in interpreting the Tax Code.

(5)          The judge erred in holding that the requirement to furnish all closing documentation was procedural and not conditional. 

(6)          The judge erred in stating (para. 58) that if completion documents set out in the Second Schedule were not received there would be no contract. 

(7)          The judge erred in holding that the fundamental requirement in the contract for the purchaser to have obtained fishing rights from the Fishing Licence Authority (FLA) had not been expressed between the parties.

(8)          The judge erred in holding that it was necessary to imply a term as a matter of business efficacy that the contract for the sale of the vessel was subject to the purchaser being allocated fishing rights by the FLA. 

(9)          The judge erred in finding Lyon (Inspector of Taxes) v Pettigrew [1985] STC 369 more persuasive that case law referred to by the Appellant.

(10)      The judge erred in construing s.542(1)(b) of the TCA by reference to the Revenue Manual which was merely an opinion as to the law and inadmissible.

(11)      The judge erred in holding that absent a completion date in the Memorandum it was contemplated by the parties that completion would take place in 2015 as the only date which appears in the Agreement. 

The standard of review and scope of this appeal

22.          This was a statutory case stated pursuant to s.949AQ TCA on points of law identified by the Appeal Commissioner therein and as such, was confined to those issues of law.  It appears that in the High Court the Appellant did not challenge any of the Appeal Commissioner's findings as to fact.  The appeal is from the decision of the High Court and Order perfected on 30^th January 2024.  This Court's function is to determine whether the High Court erred in law in determining the questions of law stated by the Appeal Commissioner.  The Appeal Commissioner's Determination sets out findings of fact underpinning his decision.  Those findings must be accepted by this Court unless there was no evidence at all to support them, as illustrated by the authorities including Mara (Inspector of Taxes) v. Hummingbird Limited [1982]ILRM 421, Mitchelstown Co-Op Society v. Commissioner for Valuation [1989] IR 210 and McGinley v. Deciding Officer Criminal Assets Bureau (Unreported, Supreme Court, 30^th May 2001).  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 Vieira Limited v. Inspector of Taxes [2021] IECA 334 (para. 54 - 55).  The principles adumbrated by McWilliam J. in Hummingbird and other relevant authorities were reviewed by the Supreme Court in O'Culacháin v. McMullan Brothers Ltd [1995] 2 IR 217 wherein Blayney J. ( O'Flaherty and Denham JJ concurring) extrapolated 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."

Those parameters of the standard of review have been followed including by the Supreme Court in Mac Cárthaigh (Inspector of Taxes) v. Cablelink Ltd [2003] 4 IESC 67 and Karshan (Midlands) Ltd t/a Domino's Pizza [2023] IESC 24.

23.         In the context of the approach to statutory interpretation of a Revenue Statute, it is to be borne in mind that O'Donnell J. (as he then was) in Revenue Commissioners v. O'Flynn Construction Ltd [2013] 3 IR 533, in a judgment supported by the majority of the court made clear that the authorities did not require the court to take a different approach to the statutory interpretation when dealing with tax issues.  He emphasised that the Interpretation Act 2005 embodies a purposive approach to the interpretations of statutes.  O'Donnell J. rejected arguments advanced in that case suggesting that the principles in McGrath v. McDermott [1988] I.R. 258 precluded a "purposive approach" to the interpretation of a tax or revenue statute.  He remarked: "Indeed, if McGrath v. McDermott stands for any principle of statutory interpretation it implicitly rejects the contention that any different and more narrow principle of statutory interpretation applies to taxation matters." He noted the observations of Lord Steyn  in the Northern Ireland case of IRC v. McGuckian [1997] NI 157, at p.166, "There has been a tendency to treat tax law, almost uniquely in the civil law as continuing to be the subject of a strict literalist interpretation ..."  O'Donnell J. followed the decision of the House of Lords in Barclays Finance Limited v. Mawson  [2005] 1 AC 684 which had made clear that like principles of statutory construction apply to taxation statutes as to all other non-criminal statutes.

Arguments advanced by the Appellant in support of his appeal

24.          The Appellant's submissions in support of this appeal sets out in detail the history of his communications with the Revenue Commissioners in connection with his claim for entrepreneurial relief under s.597AA TCA 1997.  It records that by mid-2017 a dispute had emerged between the Appellant and Revenue Commissioners the latter maintaining that the Memorandum of Agreement executed by the vendor and the purchaser on 21^st October 2015 was not subject to any condition which would render it a conditional contract and that accordingly for CGT purposes the date of disposal of the vessel and its related capacity/tonnage was 21^st October 2015.  The Appellant's response to that position, as communicated to Revenue on 2^nd October 2017, is outlined in the submissions (para. 6):

"The Appellant's agent wrote to the Respondent on 2^nd October 2017 and advised that as there were a number of conditions which had to be satisfied as set out in the Memorandum and as the power to satisfy these conditions lay with persons who are not a party to the Memorandum, they were not in agreement that the sale took place in 2015.  The Appellant's agent attached a copy of a certificate of registration of an Irish fishing vessel which was issued by the licensing Authority for Sea Fishing Boats. This document showed the Appellant's boat was registered in the new owner's name on 11^th January 2016 and as such the Appellant's agent claimed was proof that the disposal took place in 2016."

Revenue had attached weight to the Bill of Sale in relation to the said disposition, same having been signed and dated by the parties on 21^st December 2015.  Revenue asserted this demonstrated that the disposal took place in 2015.

25.         The Appellant contends that:

"The core of this appeal by way of case stated turns on whether the learned judge was correct in affirming the Tax Appeal Commissioner's finding that an unconditional contract was entered into on 21^st October 2015 and not on any later date after 1^st January 2016."

26.           The Appellant accepted as valid a series of findings of fact in relation to the transaction outlined by the Tax Appeal Commissioner in his determination at Clauses 6.1 - 6.5 inclusive.  Those findings of material facts for the purpose of s.949AQ(1) TCA 1997 are adumbrated in the case stated at Clauses 8.1 - 8.5 inclusive.  They outline inter alia a series of steps required to be undertaken to ensure that the vessel, licence and fishing rights were transferred to the purchaser.  The Appellant contends that the Commissioner's finding at 8.6 that "If those steps were not fulfilled, it is likely that the Memorandum entered into between the parties would have become frustrated" was based on an erroneous view of the law.

"... The contract would not have been frustrated in the legal sense, given that it was anticipated by the parties that those steps might not be fulfilled." (para. 16 Appellant's submissions)

The Appellant contends that the doctrine of frustration was not applicable relying on the decision in Ringsend Property Limited v. Donatex Limited and Bernard McNamara [2009] IEHC 56 which had held that the defence of frustration is "one of limited application and narrowness" and "arises in circumstances where performance of a contract in a manner envisaged by the parties in rendered impossible because of some supervening event not within the contemplation of the parties."

27.         The Appellant submits that the parties to the Memorandum of Agreement had contemplated the possibility that "an event would occur which would render the future performance of the contract impossible". He asserts that "... if the parties contemplate that some event might or might not occur and make provision for what is to happen, the contract will not be frustrated if that event does or does not occur as the case may be but will come to an end as provided for."  He contended that "Where the parties to a contract make provision for an event over which neither has control the contract is conditional upon that event occurring or not occurring as the case may be"  (para.19 of submissions)  and further contended that the parties "... contemplated a number of scenarios which might result in the transaction not proceeding to a conclusion." (para. 20)

28.          In support of his proposition that the Memorandum executed by the parties was a conditional contract, the Appellant contended that since the contract had contemplated the destruction or loss of the vessel and had made provision for what would "happen in that situation" the sale could not conclude until the purchaser's solicitor received all the documentation set out in the Second Schedule to the Memorandum of 21^st October 2015.  Reliance was placed on Clause 1.1 of the Memorandum which provides:

"Subject to the provisions of this agreement, the vendor agrees to sell and the purchaser agrees to purchase...."

It was contended that the word "provisions" encompassed the matters identified in the Second Schedule to the Memorandum.  It is argued that "...the sale was conditional upon the obtaining of these documents some of which related to receiving regulatory approval from the Sea Fishing Authority."  It was argued that "despite the finding by the Commissioner that the contract does not use the express words "subject to" such a finding is not consistent with Clause 12 of the Memorandum and in any event when the contract is analysed it can be seen that in fact the contract cannot conclude without these conditions being fulfilled." (para. 23 Appellant's submissions) There is in fact no Clause 12 in the Memorandum. Presumably, the reference is intended to be to the Second Schedule to the Memorandum.  The Appellant characterises the Memorandum thus:

"It is not disputed that the parties entered into a contract when they entered into the Memorandum... what was agreed at that point was effectively that the parties would use their best endeavours to bring about the desired situation and the contract would not conclude until that situation arose (if ever).  The issue is that the contract would not become binding until each party was in a position to call for specific performance from the other."  (para. )

He contends that until external parties took all steps the contract "could not become binding".

29.          The Appellant disputes the conclusion of the High Court in affirming the Commissioner who had considered that had the agreement not completed "there would have been no disposal for CGT purposes and the date of disposal would not be an issue."  Reliance is placed on the decision in Crean v. Drinan [1983] ILRM 82 as cited with approval in Cregan v. Taviri Limited [2008] IEHC 159 where Charleton J. had remarked: "... a condition requires a vendor to accomplish something prior to completion, then the vendor is subject to the same stricture, save that it can happen that if a contract provides that a condition must be fulfilled prior to conveyance, it can operate under the contract as a condition precedent without which no sale can be completed: Crean v. Drinan 1983..."

30.          The Appellant suggests that the date for the binding contract is the date "... when the conditions were completed so that either could enforce completion of the contract." Emphasis is continually placed on completion. The Appellant posits the proposition that "if one possibility is that the sale will not complete then the contract of sale is conditional on a point being reached when that possibility is eliminated, in this case the granting of fishing rights" (para. 28).  The Appellant emphasises "for completion to take place the purchaser must have fishing rights and there must be a sufficiently intact vessel available."  In regard to "business efficacy" reliance is placed on Moloney v. Dansk Bank [2014] IEHC 441.  In Moloney Cregan J. opined that as part of an agreement:

"... the parties might agree that a certain condition must be fulfilled before the rest of the contractual conditions can be fulfilled or become enforceable. That condition could be called a "condition precedent". It is a condition which must be fulfilled before the rest of the contract can be performed. It is, in effect, a condition which precedes the other contractual obligations being performed or becoming enforceable."

31.           The Appellant strongly disputes the High Court judgment at para. 56 where the court rejected the suggestion that "...the sale of the vessel could be likened to the sale of property " 'subject to planning permission'"". The Appellant takes issue with the analysis of the High Court judge which, though acknowledging that when the contract became enforceable "may well be a matter for the parties to the contract" had concluded " it is not an issue which the Commissioner should take into consideration in interpreting the Tax Code."  The High Court was said to have erred in stating that the issue of "business efficacy" was "entirely different to the issues which the Commissioner was dealing with." (para. 56).  The Appellant submits (para. 37) "It is quite clear that the parties entered into a contract in October 2015."  The Appellant then goes on to assert that it was "inconsistent with the findings of the Commissioner and the learned High Court to say that if the license had not been granted to the purchaser the sale would not have been concluded and thus there would have been no contract." 

32.         It is asserted that the grant of fishing rights by the SFA is "discretionary".  In regard to para. 58 of the judgment it is argued that the views of the Judge "cannot be correct in light of the finding that there was a contract if certain items not in existence at the time of the making of the contract did not become available there would be no contract."  The finding of the High Court that requirements in regard to the furnishing of documentation and other steps (para. 59 of High Court judgment) was "procedural and not conditional" is said to be erroneous.  It is emphasised that there is alleged to be express "mention of the Sea Fishing Licence"(para.41) in the Memorandum.  The Appellant contends that the High Court's view of the decision in Lyon (Inspector of Taxes) v. Pettigrew [1985] STC 369 was erroneous.  "In that case it was found as a matter of law that the licenses could not be separated from the vehicles and therefore the sale of the one automatically involved the sale of the other.  The exact opposite is the case, and so found, that by law the licence cannot be sold with the vessel.  The licence must be surrendered, and a new licence applied for, the grant of which is not guaranteed."  (para. 42 Appellant's submissions)

33.          I pause to observe that despite repeated assertions that there is express reference to a "sea fishing licence" such words are not readily apparent in the Memorandum of Agreement.  Further at para. 45 in the context of arguments directed towards "the business efficacy test" the Appellant urges that the test must be looked at from the point of view of the parties as business persons and not from the point of view of any advantage that might be gained by one of the parties - "the situation would be different if the contract was silent on the licence."  "It would then be the case that the vendor could force the sale even if the purchaser failed to obtain a licence.  The purchaser could not be heard to complain that the sale was subject to the obtaining of the licence."  (para. 45)

34.         The Appellant asserts that there is no valid reason why the principles governing contracts for the sale of land cannot be applied in the case of contracts for the sale of chattels.  It was argued that the decisions in Murphy v. O'Toole and Lyon v. Pettigrew were less persuasive that O'Connor v. Coady and Hand v. Greaney.  In conclusion, the Appellant contends that, at most, what was agreed between the parties in October 2015 was a conditional agreement in which each party would use their best endeavours to bring about the position whereby the vendor would be divested of his fishing rights and the purchaser would acquire like fishing rights and the Appellant would have possession of the vessel in a sufficiently intact condition (para. 47).

35.         The Respondent contests this analysis citing s.542(1) TCA 1997 and emphasising the central relevance of the "date of disposal" for CGT purposes as the key operative date.  It is contended that "... there are no clauses in the Memorandum to provide that performance of the contract is in any way conditional on the provision of any of the cited documentation."  (para. 18). It is emphasised that "there is a clear distinction between the date the contract is entered into; the date on which a condition of the contract is satisfied; and the date of the completion of a contract." It is contended that the completion date is not relevant to ascertainment of the "date of disposal for CGT purposes" (para. 21)

36.         In support of its contention that the Memorandum of Agreement of 21^st October 2015 is not a conditional contract, reliance is placed by Revenue on its Manual Part 19 -01-15 (cited above) and the following authorities: Parway Estates Limited v. Commissioners of Inland Revenue, Eastham v. Leigh London and Provincial Properties Limited 1971 46 TC 687, Manchester Diocesan Council of Education v. Commercial and General Investments Limited [1969] 3 All ER 1593 and in particular the dictum of Buckley J. at p.1598 "... the power to complete a sale is conditional on prior approval, but not the power to contact.  The fact that Ministerial approval was not obtained until 18^th November 1964 does not, in my judgment, invalidate the contract, if any, made on 15^th September."

37.          Reliance is also placed on the House of Lords decision in Jerome v. Kelly [2004] STC 887 concerning the UK equivalent of s.542(1)(b) TCA 1997, where Lord Hoffman concluded that the statutory provision merely fixes the time of disposal for the purposes of CGT liability in circumstances where there is ultimately an actual disposal.

38.         Revenue contends that the entire purpose of s.542(1)(b) TCA "is to determine the time of disposal of a conditional contract where the condition is ultimately satisfied.  Section 542(1)(b) is of no relevance where no disposal actually takes place." (para. 34)  Reliance is placed on O'Connor v. Coady to assist understanding conditional contracts.  The Respondent asserts that the contracts under consideration in Lyon (Inspector of Taxes) v. Pettigrew were not conditional. Rather, they concerned the disposition of certain taxis and associated licences.  Under relevant legislation the taxi and licence relating to same could not be disposed of independently of each other.  In Pettigrew the court followed the earlier decision of Eastham v. Leigh 1971, the contracts in question were held not to be conditional pursuant to the relevant statutory provision equivalent to s.542(1)(b) TCA 1997 holding that a contract was only conditional where all the liabilities under same are conditional on a certain event.

39.         Revenue offered Lee Parker and Another v. Izzet and Others (No. 2) [1972] 2 All ER 800 as authority for the proposition that for a valid conditional contract to come into existence the terms of the condition must be clear and certain.  In that case a special condition providing that the sale was subject to the purchaser obtaining "a satisfactory mortgage". Goulding J. concluding that the contract was void because of the uncertainty of the condition which he characterised as a condition precedent.

40.         Revenue contends that the Appellant is not entitled to rely on the decision in Cregan v. Taviri since on the facts of same the contract was subject to an express condition precedent "subject to the consent of the landlord".   Revenue contends that the fact that certain licensing, registration and other statutory requirements had to be complied with does not mean that the Memorandum of 21^st October 2015 was not a binding unconditional agreement. (para. 41).  Further it is emphasised that clauses 2.3 and 3.1B of the same states that the documents identified in the Second Schedule were only to be delivered "upon completion".  It is contended that the Memorandum did not specify that the contract was conditional in the sense provided for in s.542(1)(b) TCA 1997. Same is concerned solely with the "date of disposal" for CGT purposes.  Of the contention of the Appellant that conditions could be implied into the Memorandum, Revenue contend that same was not subject to any implied terms or conditions as to its performance.  Further, that "... an implied condition cannot operate so as to render the contract a conditional one for the purposes of s.542(1)(b)."  (para. 53)  Reliance is placed on Murphy v. O'Toole & Sons where Baker J. observed "For a contract to be a conditional contract, it seems to me that such a condition must be expressed between the parties, and the court will not imply a financing term, as such a term was not necessary to give business efficacy to this contract which was perfectly capable of being made without such a condition, albeit that performance of the obligation of one party required financing."  Reliance is also placed on the dictum in the said judgment that "... the court will not imply a financing term or any other term to give business efficacy to a contract which was perfectly capable of being made without such a condition."

Analysis

Promissory Contracts v. Contingent Contracts 

41.        Contracts traditionally were divided into promissory contracts and contingent contracts.  Contingent contracts can in turn be sub-divided into those subject to condition/s precedent and those subject to condition/s subsequent.  A condition precedent is a fact which is a necessary prerequisite for the creation of a binding contract. A condition subsequent is defined in Chitty on Contracts (35th ed), Vol I Part 2, at para 4-197, thus: 'A condition is subsequent if it provides that a previously binding contract is to determine on the occurrence of the specified event'. The distinction is crucial insofar as a contract subject to condition subsequent does not preclude the coming into existence of a binding agreement between the parties in the first instance.

42.        Whether a condition in a contract is truly conditional so as to render the contract contingent in nature or merely a term of a promissory contract can frequently be difficult to ascertain as decisions such as Eastham v. Leigh make clear.  As was held in Hatt v. Newman [2000] STC 113, a contract for the disposal of property which was conditional on the grant of planning permission, became unconditional once the permission was granted.

43.         In the case of Jerome v. Kelly (Inspector of Taxes) [2004] STC 8878 (Jerome) Lord Walker noted of the relevant statutory provision [equivalent to s542(1)(b)] ; "That would cover many long-term contracts for the sale of land with development potential, since such contracts are often conditional on planning permission being obtained. But it is common ground that in this case the contract was unconditional. A contract is not conditional merely because it contains obligations which may be termed promissory conditions: Eastham v Leigh London and Provincial Properties Ltd [1971] Ch 871 ." The case concerned a contract for the sale of land where the date of completion was dependent on a grant of planning permission issuing.  It was conceded by both parties that the contract on its true construction was unconditional.  The purchaser was under an obligation to seek planning permission and a date for completion had been fixed.  He was entitled to rescind at any time were planning permission for the specified purposes refused or granted in an unsatisfactory form.  The contract provided for a long stop date of seven years after which the purchaser was entitled to rescind if no planning permission had been granted.  The House of Lords held that the obligation was promissory rather than contingent on the part of the purchaser and the contract was unconditional for the purposes of the statutory equivalent of s.542(1)(b). 

44.           Where the requirement to obtain planning permission is "merely a matter of conveyance" because the obligation to sell is already binding, then the contract will be treated as unconditional.  By analogy, like principles apply where an aspect of the transaction involves input by a third party such as in the instant case where the Second Schedule, line 9 point 9 states: "Confirmation of fishing entitlement".  There is a well established regulatory process for the acquisition of fishing entitlements where a fishing vessel is on sale which involves, rather than a direct transfer from vendor to purchaser a surrender and extinguishment of the tonnage held by the vendor and the grant of an identical capacity tonnage to the purchaser subject to the all the procedural steps having been taken by both parties as outlined above.  Thus, insofar as there was a statutory requirement to obtain third-party consent from a regulatory authority such did not have the effect of rendering this a contingent contract subject to condition precedent ab initio. Furthermore, there were no changes made to this unconditional contract between signing and completion. 

45.          Jerome concerned a transfer by three individuals of their beneficial ownership in property by means of an unconditional contract of sale to a third party.  Subsequently two of the vendors transferred their shares to an offshore trustee company.  At issue was whether the two original vendors or the offshore trustee company to which they sold their interest should be treated as effecting the "disposal", and whether the assignment by the individual vendors of their shares to the offshore company gave rise to an entirely new contract. Such issues are not at all engaged in the instant appeal. The House of Lords held, overturning the decision of the Court of Appeal, that; "the main issue is whether section (equivalent to s.542(1)) (which the courts below treated as being, at least in some sense, a deeming provision) fixes not only the time of a disposal but also the person by whom it is made." It concluded that the section's effect "was intended to deal only with the question of fixing the time of disposal."  It is to be borne in mind that the contract itself is not the ultimate or final vesting of the asset in the purchaser which occurs by way of completion normally at a later date; Hardy v. HMRC [2016] UK UT 332 (TCC).

 Promissory Conditions

46.            Promissory contracts contain conditions which are essential terms of the contract in question and include matters of title.  The fact that a contract to sell is subject to performance of obligations imposed by its terms i.e.  what might be termed promissory conditions precedent to completion, does not make it conditional in the sense of being subject to contingent conditions. A promissory agreement is binding from the outset. This is illustrated by Eastham v. Leigh, where  an agreement to grant a lease of land subject to the construction of a building by the purchaser was construed as an unconditional agreement. It was a promissory agreement, binding ab initio, subject to a condition precedent to completion.

47.         Likewise, a condition pursuant to which the contract might come to an end on the failure by a party to perform obligations under a contractual term does not render it subject to a contingent condition subsequent.  Rather it is a promissory condition subsequent. There is a deemed disposal ab initio, should the transaction ultimately fail to complete as outlined above in Jerome and Underwood, potential liability to CGT is at an end. 

Conditional Contract v. Unconditional Contract

48.         Some commentators reject the promissory/contingent categorisation in favour of a simpler taxonomy. An excerpt from the judgment of Geoghegan J. in O'Connor v. Coady, para. 27,  is illustrative for present purposes where he observes:

" In my view, the more helpful terminology is the distinction between a "conditional contract" and an "unconditional contract". As we all know, by a strange quirk of the law, ordinary terms of an unconditional contract if they are of sufficient importance will themselves be described as conditions but that does not mean that the contract is conditional. Normally, a conditional contract will not mean a contract which only comes into existence upon fulfilment of the condition but rather a contract which can only be enforced upon fulfilment of the condition. That is what this contract was."

Conditions

49.         As noted by Clark "Contract Law in Ireland", 9^th Ed. 2022 at 9.15

"The issue of whether an express term is a condition is not a matter of law but one of interpretation. The test for deciding whether a term is a condition or not, in cases where parties have not expressly so provided, is to be found in the words of Bowen L.J. in Bentsen & Son v Taylor, [1893] 2 QB 274 at p.281:

"[T]here is no way of deciding that question except by looking at the contract in the light of the surrounding circumstances, and then making up one's mind whether the intention of the parties, as gathered from the instrument itself, will best be carried out by treating the promise as a warranty sounding only in damages, or as a condition precedent by the failure to perform which the other party is relieved of his liability."

Therefore, the test for a condition requires the courts to look at the contract document and surrounding circumstances—at the time of contracting and not subsequent events—and try to fix the intention of the parties."

50.         The word "condition" can be used in a variety of contexts.   In Total Gas Marketing Limited v. ARCO British Limited [1998] 2 Lloyds Rep. 209 at 220 Lord Steyn observed;

"The word 'conditions' and the phrase 'conditions precedent' are used in a number of different senses in English law. Lewison identifies six current meanings of the word 'condition': see  Interpretation of Contracts (2nd edn, 1997), p. 389. This is a source of recurring confusion.  But the prospects of persuading lawyers to adopt a more rational terminology are bleak."

 He continued;

"In civilian legal systems a condition is sharply distinguished from the actual terms of a contract. It is reserved for an external fact upon which the existence of the contract depends: see Cheshire, Fifoot, and Furmston,  Law of Contract ... In English law a condition frequently means an actual term of the agreement. It is therefore necessary to distinguish between promissory and contingent conditions."

 Lord Steyn having considered the competing interpretations advanced noted;

"The question is which of the four interpretations put forward best matches the expressed contractual intent of the parties. This question must be considered in the light of the contractual language, the contractual scheme, the commercial context, and the reasonable expectations of the parties. And it must be judged as at the time of the conclusion of the contract, viz 15 February 1995."

Having considered the specific term in issue he held it to be "in  promissory form in so far as it imposes a reasonable endeavours obligation on the seller to secure the fulfilment of the conditions precedent."

"Disposal" v. "Completion"

51.          The key issue to be determined is whether "a disposal" within s.542(1)(a) TCA 1997 of the appellant's interest in the assets took place and if so did same occur before 1 January 2016, or does the Memorandum constitute  a conditional contract which only took effect on or after 1^st January 2016 so as to fall within s.542(1)(b) TCA. The assessment of the evidence must be considered in the light of the relevant statutory provisions. The parties disagree as to whether "... an asset was disposed of and acquired under a contract" on the of 21^st October 2015 or whether, as the Appellant contends, the agreement falls within subsection 1(b) and was conditional, with disposal and acquisition being made at  the time at which the condition is satisfied on  11^th January 2016.

52.         The "disposal" is the chargeable event for the purposes of CGT s542.  The event of completion is the final transfer by vesting under the contract, but, for tax purposes the "disposal" is treated as having taken place at the date of the contract as s.542(1)(a) makes clear, unless the contract is conditional in which case there is a deemed disposal when the condition is satisfied. 

53.          Section 542(1) is directed towards identifying the formation of the contract and not the date of completion.   A well-established exposition of the principles governing the ascertainment of whether a concluded agreement has been reached is set forth in Wylie and Woods "Irish Conveyancing Law" 4^th Ed. 2019 at 10.03 - 04.  As the authors observe:

"It is essential in every case to determine first the crucial issue of whether the parties ever reached the stage of a concluded agreement.  If they did not, i.e. they remained in a stage of negotiation or an offer by one party has not been accepted by the other or acceptance has not been communicated to the other, there is no contract to be evidence as required..."

The authors continue:

"It is also important to recognise that there is one basic distinction to be drawn when considering so-called "conditional" contracts.  This is the distinction between a condition which must be satisfied before any contract at all becomes binding on either party, i.e., a condition precedent and a condition which results in a contract which is already binding on both parties ceasing afterwards to be binding, usually as regards one of the parties only and then at his option, i.e., a condition subsequent.  Though the courts have not often put the matter in quite these terms, there is no doubt that they recognise the distinction in substance in relation to conveyancing contracts." (10.03)

That statement of the law originally appeared in the first edition of Wylie.  It has oft been cited with approval notably by Costello J. (as he then was) in Dorene Limited v. Suedes (Ireland) limited [1981] 1 IR 312 at 324.  As the authors note "it is considered that this formulation makes the distinction clearer than alternatives such as one which distinguishes between a condition precedent to formation of the contract and a condition precedent to performance of the contract." (emphasis added)

54.         Such also appears to be the state of the law in England and Wales as illustrated by the case of Hatt v. Newman (Inspector of Taxes) per Parker J.  In that case the contract for sale provided "If the ... planning permission has not been granted by the completion date this Contract shall be at an end and the Sellers' solicitors shall refund the 10% deposit without interest." The court was satisfied that the contract, on its true construction, was a conditional contract. The Revenue's position was that the contract was a conditional contract within [542(1)(b)] , with the consequence that the "disposal" took place for CGT purposes only when the condition was fulfilled;  Parker J. agreed but observed that, in any event, even if on a true analysis the contract was not a conditional contract within the meaning of that section i.e. a contingent contract subject to a condition precedent (on the basis that the planning special condition was a condition subsequent, which would not prevent contractual obligations arising when the contract was concluded), the appropriate date of "disposal" for would still have been the date of the contract.  In consequence the disposal took place for CGT purposes at the date the condition was fulfilled and not at the date the contract was executed by the parties.  In all of the above cases, the contingent conditions were explicitly stated on the face of each contract.

55.         Although the key issue in Jerome (concerning intermediate dispositions) does not arise in the instant case the observations of the court are highly germane. Three trustees entered into a contract in 1987 to sell lands which they held for themselves as beneficiaries.  The contract contained a special condition pertaining to outline planning permission. In 1989 two of the beneficiaries assigned their shares to the trustees of two Bermuda Incorporated Settlements.  Subsequently, between 1990 and 1992 the trustees completed the sale of the lands.  The House of Lords and Hoffman LJ. noted that the relevant operative statutory provision (equivalent to s.542(1)(b)):

"... would cover many long-term contracts for the sale of land with development potential, since such contracts are often conditional on planning permission being obtained. But it is common ground that in this case the contract was unconditional.  A contract is not conditional because it contains obligations which may be termed promissory conditions: Eastham v. Leigh London and Provincial Properties Limited [1971] Ch 871.  As the history of this litigation shows, the statute does not give a clear answer to the question how intermediate dispositions, subject to and with the benefit of a subsisting and uncompleted contract, are to be viewed."

56.          Concerning the section equivalent to s.542(1), Hoffman L.J. noted that it:

"... appears to be directed to a single limited issue, that is the timing of disposal. It does not say that the contract is the disposal, but that a disposal effected by contract and later completion is to be treated, for timing purposes, as made at the date of the contract."

 He found that the section had "enacted an apparently simple rule directed at the timing of a taxable event...This rule has to cover disposals of assets of all sorts under contracts...".  (para. 28)  Of the position between entering into a contract and completion of an agreement he noted "The provisional assumptions may be falsified by events, such as rescission of the contract (either under a contractual term or on breach)." (para. 32)

57.         A central issue in Jerome concerned the contingent way in which [s.542(1)] operated where a taxpayer/vendor enters into a contract to sell an asset giving rise to a disposal and subsequently - between the time contract and completion - changes occur in the beneficial ownership of that asset - an issue which does not arise in the instant case.  The essence of the decision in Jerome was usefully summarised thus by Justice Arnold in Hardy v. Revenue and Custom Commissioners (TCC):

"In short, [Jerome] states when a seller and a buyer enter into a contract for the sale of land, the seller does not dispose of an asset and the buyer does not acquire an asset. The asset, which is the land, is disposed of by the seller and acquired by the buyer when completion takes place, albeit that section [542(1)] will then deem the date of the transfer to be the date of the contract."

58.         The decision in Underwood v Revenue and Customs Commissioners [2008] EWCA Civ 1423 at para. 49-53 following Jerome emphasised that there could only have been a "disposal" if the beneficial interest in the property ultimately transfers to the purchaser. Emphasis was placed on the principle identified by the House of Lords in Jerome (para. 11 of Hoffman L.J.) that the time of the contract is deemed to be the time of the disposal only if there is ultimately actually a disposal. Collins L.J. in Underwood observed: "In [Jerome] it was held that [s.542 (1)] is simply a timing provision, deeming the disposal and acquisition (once occurred) to take place at the time of the contract.  It was intended only to deal with the question of fixing the time of disposal and not with the substantive liability to tax. [S.542(1)] contains no provisions dealing with happens if the contract goes off.  In such a case, as Lord Hoffman said in Jerome v. Kelly at [11] there would be no disposal and nothing to deem to have happened at the time of the contract.  That makes practical sense because it would be unjust to impose Capital Gains Tax on the basis of the contract price when the property is left with the vendor."

Conditional contracts

59.         Care should be taken to distinguish between on the one hand, a condition to be satisfied before any binding contract exists at all and where meanwhile the parties have no obligations and on the other hand, a condition which must be satisfied before completion can occur - the latter is  a condition subsequent and a binding contract has come into existence ab initio.  In each case the terms of the actual contract under consideration must be carefully considered and evaluated. 

60.         As Wylie and Woods emphasises: "... there is no doubt that [the courts] recognise the distinction in substance in relation to conveyancing contracts" between conditions precedent and conditions subsequent.  McCracken J. in O'Connor v. Coady observed at para 13:

"...at the hearing of this appeal there was considerable discussion as to whether the condition relating to planning permission was a condition precedent or a condition subsequent. The distinction may at times be of considerable importance, in that if there is a condition precedent, then no contract comes into existence unless the condition is fulfilled, while if there is a condition subsequent, there is a valid contract in being, but it is not enforceable unless the condition is fulfilled"

61.          In evaluating the Appellant's contention that the Memorandum of 21^st October 2015 is a "conditional contract", it is helpful to have regard to the observations of Geoghegan J. in O'Connor, particularly at pp. 281 - 284 where he observed that counsel for the parties "...seem to assume that the expression  'condition precedent' necessarily and exclusively refers to a condition the effect of non-compliance with which means that no contract of any kind comes into existence. They seemed to take the view that every other kind of a condition that might be said to render the contract "conditional" was a condition subsequent. He cited Gibbs C.J. in Perri v. Coolangatta Investments Property Limited [1982] 149 C.L.R. 537.  

A condition merely precedent to completion doesn't prevent a binding contract coming into existence ab initio

62.           Gibbs C.J. in Perri held, on the evidence, that a condition providing firstly for completion of the sale by the purchaser of his own property before he would be obliged to complete the purchase of a dwelling under the contract amounted to a: "condition precedent to the performance of certain of the obligations of the parties under the contract including the obligation of the Respondent to complete the sale".

63.          Geoghegan J.  in O'Connor v. Coady at para. 21 cited Gibbs CJ with approval :

"It has sometimes proved difficult to decide whether a particular condition of a contract should be classified as a condition precedent or a condition subsequent, and as Professor Stoljar has pointed out in  'the contractual concept of condition' Law Quarterly Review Volume 69 (1953) 485 at p. 509 if the words 'precedent' and  'subsequent' are to make sense they must be connected with a definite point of reference since they express a relationship in time, the question which must be asked is  'precedent to what? Subsequent to what?' . However, provided the effect of a condition is clearly understood, its classification may be merely a matter of words. The condition in the present case was not a condition precedent to the formation of a binding contract. It is clear that a binding contract came into existence immediately upon signature and that the parties to it were from that moment subject to certain obligations." 

Geoghegan J. also noted that Mason J. in his judgment in Perri had noted:

"... that generally speaking the court will tend to favour the construction which leads to the conclusion that a particular stipulation is a condition precedent to performance as against that which leads to the conclusion that the stipulation is a condition precedent to the formation or existence of the contract. He points out that in most cases it is artificial to say in the face of the details settled upon by the parties that there is no binding contract unless the event in question happens."

He noted  ( para.23) that the latter view: "exactly corresponds with the view  in O'Mullane v. Riordan [1978] I.L.R.M. 73 at 77 where McWilliam J. observed:

"...The fact that a contract is subject to a condition has the effect of making it unenforceable until the condition is fulfilled, but it does not mean that there is no contract at all and the case cited decided that the purchaser was entitled to recover his deposit under a term of the agreement. A conditional contract is one which becomes enforceable provided the condition is fulfilled within the time provided by the contract or if no time is provided within a reasonable time."

64.          Geoghegan J. also cited Hunt v. Wilson at 267, a decision relied on by Wilson J. in Perri, where Cooke J. observed:

"I venture to think that the ambiguous labels precedent and subsequent when applied to conditions are seldom of real help in solving issues in this branch of contract law. Certainly, they can be positively misleading unless the meaning of what has been said is made specific by explaining to what the condition in question is seen as precedent or subsequent."

65.         It is clear from authorities such as Thompson v. King [1920] 2 IR 365 that the effect of a condition is always a question of construction.  As Pim J. observed in Thompson, as cited in Wylie & Woods Irish Conveyancing Law 4^th Ed. Bloomsbury Professional 2019:

"The gist of all the cases is that the Court should in each case having considered the wording of the documents containing the alleged contract, the correspondence before and after, and the nature of the transactions, say whether in fact the parties meant that the matter in negotiation should remain in a state of negotiation until a formal contract was signed, or whether they only meant that the contract which had been entered into should be embodied afterwards in a formal contract. It is in every case an issue of fact for the Court." (para.10.04)

As Wylie & Woods observe:

"Regardless of the labels used it is vital to determine whether the condition prevents the formation of the contract."(10.03) opus cit.

66.         In the context of Capital Gains Tax, the operative time for assessment of liability to CGT pursuant to s.542(1) TCA is the time of "disposal" of the asset. Where the contract is conditional, the time at which the condition is satisfied is as provided by s.542(1)(b). Only conditions precedent are captured by s.542(1)(b). Authorities for this proposition include Eastham v. Leigh London and Provincial Properties Limited [1971] Ch 871, and Lyon (Inspector of Taxes) v Pettigrew and Hatt v Newman (Insp of Taxes).

67.          In Eastham the taxpayer contracted with the vendors of land whereby if the taxpayer completed a building on the site in accordance with specifications and conditions within a period of two years, the vendors would grant a lease of same to the taxpayer for the term of 125 years. The taxpayer completed the construction in accordance with the terms of the contract and the vendors granted him the lease.  The Court of Appeal held that the contract was not a conditional contract and that the land had been acquired by the taxpayer at the date of execution of the contract rather than at the later date when the conditions had been complied with.  This was so because whilst the grant of the lease was dependent upon the fulfilment of certain obligations by the purchaser, those obligations themselves formed part of the purchaser's obligations pursuant to the contract and constituted the consideration for the vendors' promise to grant the lease.  Russell L.J. observed that the answer to the question of whether the contract was conditional was "short and simple":

"Once it is accepted that it is one contract of acquisition and not two contracts the matter is completely answered.  If there be one contract I cannot see, with respect, how the postponement of the carrying out of one part of one contract until the fulfilment of the consideration by the other party can in any way be properly described as the "condition" of the contract as distinct from a perfectly ordinary part of, or term of, the contract."

68.         In the later case of Lyon (Insp. Of Taxes) v. Pettigrew the taxpayer signed contracts for the sale of six taxis together with their licenses.  The consideration for each sale was £6,000 to be paid in instalments of £40 per week over a period of 150 weeks.  Under each contract, consideration for the licence and for the taxi were expressed separately and the contract provided that the property in the vehicle passed to the purchaser immediately whereas title in the licence passed only when the last of the instalments had been paid in full.  At first instance it was held that the contract was conditional upon payment of the entire of the instalments of £40 per week over 150 weeks for the purpose of the relevant statutory provision (equivalent to s.542(1)(b) TCA 1997),  accordingly liability for CGT arose only when the last instalment had been paid.  On appeal Walton J. in the High Court rejected that analysis as "... a wholly unmaintainable position".  He considered that there were only two types of cases traditionally covered by the words "the contract is conditional", the first being contracts which were "subject to contract" where there was accordingly "no contract at all".  The second category was where all the liabilities under the contract are conditional on a certain event.  As an example of the latter category he outlined a scenario where a hotelier makes a booking with a tour operator conditional on the next Olympics being held in London: "... until it has been decided that the next Olympic games are going to be held in London there will be no effective contract: the whole contract would be conditional, the whole liabilities and duties between the parties would only arise when the condition was fulfilled.  But it is quite clear that the present contract is not in the slightest like that."

69.         Chitty on Contracts 34^th Ed. 4-195 notes of contingent and promissory conditions: 

"The word "condition" may refer either to an event or to a term of a contract... Where "condition" refers to an event, that event may...

(1)...refer to an occurrence which neither party undertakes to bring about...the obligations of both parties are contingent on the happening of the specified event. This may...be described as a  contingent condition.

(2) ...refer to the performance by one party of his undertaking...the condition may be described as promissory.

(3) An intermediate situation arises in the case of a unilateral contract..."

Contingent conditional contracts

70.         Where the contract for sale is subject to a contingency going beyond express obligations assumed by the parties pursuant to the contract such as by the insertion of an express contingent condition precedent to performance, the contract is thereby rendered conditional until such time as the contingency occurs.    A contract which is subject to a condition precedent to its formation is contingent in the sense of being subject to a contingent condition precedent. No contract, conditional or otherwise, exists until the contingent condition precedent is  satisfied.

Chitty opus cit. at 4.196  states:

Contingent conditions may be precedent or subsequent. A condition is precedent if it provides that the contract is not binding until the specified event occurs. A condition is subsequent if it provides that a previously binding contract is to determine on the occurrence of a specified event...Whether a condition precedent or subsequent exists is a matter of interpretation."(emphasis added)

Contingent contract subject to condition precedent

71.         A contingent contract subject to condition precedent arises where an essential term of the contract or an essential obligation is assumed by one or both parties. There is no contract in existence until the condition precedent is fulfilled such as in Parway Estates Limited v. IRC and neither party will be liable to the other if the condition is not fulfilled. A condition precedent must be satisfied before the obligations of the parties under the contract become legally binding in the first place. There is no legally binding contract until such time as the condition/s precedent have been satisfied.

72.         In substance, s.542(1)(b) is to be understood as providing that contingent conditions precedent found in a contract will render the contract conditional and "disposal" occurs when the condition is satisfied.  The key issue in each case is whether the condition prevented or precluded the coming into existence of any contract between the parties in the first place in which case it is a contingent condition precedent. 

73.           The expression of a condition as a condition precedent endows it with the character of essentiality. It is clear from the authorities that the courts lean against construing a condition in a contract of sale as a contingent condition precedent unless, in the words of Gibbs C.J. in Perri, "... the formation of a binding contract depends on its fulfilment" (para. 4).   In Gange the Australian court observed: "Whilst the effect of a condition must in every case depend upon the language in which it is expressed and a decision upon the meaning of one condition cannot determine the meaning of a different condition the authorities cited do show a disposition on the part of courts to treat non-fulfilment of a condition such as that here under consideration as rendering a contract voidable rather than void in order to forestall a party to a contract from gaining some advantage from his own conduct in securing, or contributing to, the non-fulfilment of a condition bringing the contract to an end."

74.         John Farrell in the text "Irish Law Specific Performance" Butterworths, 1994 observed at 3.20:

"A distinction may be made between a condition which must be satisfied before any legally binding contract comes into operation (a condition precedent) and one which is part of a legally binding contract but which, if not fulfilled, can result in the contract ceasing to be binding (a condition subsequent)."

He cited Costello J. in Dorene Limited v Suedes Ireland) Limited [1981] IR 312 at 324 which had approved an excerpt from Wylie "Irish Conveyancing Law", 1^st. Ed. 1978 para. 9.069.  The author continues:

"In the case of a condition precedent the condition must be fulfilled before the relevant party can be legally bound.  This type of case is in no way similar to that of a purchaser who buys a property but safeguards himself by providing that he may avoid the bargain if, e.g., he fails to obtain a loan or get planning permission."

Having examined the precise terms of the contract in Dorene, Costello J. had observed:

"Dorene... made an offer to take a lease but made the offer subject to certain conditions which had to be fulfilled before it could be legally bound. The situation was in no way similar to that of a purchaser who agrees to buy a property but safeguards himself by providing that he may avoid the bargain if, for example, he fails to obtain a loan or fails to obtain planning permission."

75.          Farrell notes opus cit. at 3.21: "In Sepia Limited v. Hanlon Limited [1979] ILRM 11 a special condition made the contract "subject to the purchaser obtaining planning permission to develop the property the subject matter of the sale..."  Costello J. held having construed the contract and relevant special conditions that as the purchasers had failed to obtain planning permission by the closing date, and where time was of the essence , if that date was not extended by mutual agreement, then the vendors were entitled to treat the contract as at an end if the purchasers continued to refuse to complete. 

76.           The decisions of Costello J. in both Dorene Limited and Sepia Limited represent the law in this jurisdiction.  Planning permission conditions are usually contingent conditions subsequent where the contract is immediately binding between the parties but subject to the non-occurrence of the events specified whereupon the contract will then cease to bind the parties save and except where the beneficiary of the special condition waives same.  But each contract turns on its own terms and the express language used by the parties.

77.         A contingent condition precedent is one that precludes the coming into existence of a binding contract between the parties until such time as the condition in question has been fulfilled or performed.  It appears from the authorities that only contracts subject to conditions precedent i.e. contingent conditions precedent are deemed to be conditional for the purposes of CGT pursuant to s.542(1)(b).

78.         The decision in Lyon shed light on the approach of the courts in England and Wales to assessing claims that a contract is contingent so as to fall within the equivalent measure to s.542(1)(b).  In Lyon, the vendor contracted to sell taxis together with associated licences.  An express term was that title in the licences would pass only on payment of the final instalment of the stage payments of the consideration.  Walton J., following Eastham, held that the contracts were not conditional under [s.542(1)(b)] on the basis that other than agreements made "subject to contract", a contract is only conditional where all of the liabilities under the contract are conditional upon occurrence of a certain event. 

79.         In each case the court must closely consider the contract. In Manchester Diocesan [1969] 3 All ER 1593where the power to complete the sale was conditional on ministerial consent, Buckley J. held that the power to complete a sale was conditional upon prior approval, but not the power to enter into the contract. Accordingly, the time of disposal for CGT purposes was immediately upon execution of the contract.

80.         The decision in Lee-Parker and Anor. v. Izzet and Ors. (No. 2) illustrates an instance where a condition was held to be precedent to a contract being formed such that no contract could come into existence until the condition was fulfilled it thereby constituting a contingent condition precedent. Lee-Parker (No.2) was one of the decisions considered by Baker J. in Murphy v. O'Toole.

81.          Clauses and conditions such as the General Conditions in a contract for sale do not   per se render a contract "conditional" within s542(1)(b) or subject to a condition precedent.  Many contracts involving a delayed completion date envisage performance of obligations by one or both parties prior to completion.  Where a condition contains obligations in connection with essential terms of the contract (otherwise termed promissory conditions) the contract is not thereby to be characterised as contingent, as was made clear by Walker L.J. in Eastham v. Leigh London (para. 26).

82.          The issue of conditional contracts was considered in Hardy v. HMRC [2015] UK FTT 250 referred to in the appeal.  That decision was subsequently appealed to the Upper Tribunal Hardy v. Revenue and Customs Commissioners [2016] UK UT 332 TCC which was not referred to by either party.  In the course of the appeal the appellant advanced the novel argument that when he entered into the contract in question he acquired valuable contractual rights which constituted an "asset" such that when the vendor rescinded the contract those rights were extinguished, and, hence, Mr. Hardy had "disposed of" the assets upon the rescission which resulted in a loss of the forfeited deposit..

83.         The Upper Tribunal in Hardy held that what Mr. Hardy had acquired on execution of the contract was primarily the "right, subject to compliance with his own obligations, to compel performance of the seller's obligations under the contract and in particular to obtain specific performance of the seller's obligations to convey legal title in the property to him." The court accepted that same were valuable rights but it did not necessarily follow that it was an "asset" for the purposes of CGT legislation.  The court held that as was noted in the decision of O'Brien v. Benson [1980] AC 562 and cited in the later case of Seghal v. CHMRC  [2024] UKUT 74  " 'Property' is represented by a bundle of rights.  All property represents a 'right' but not all rights are property.

84.         A contingent contract is one where the obligation of the parties pursuant to its terms  are contingent on some future event. This contrasts with a promissory contract where one party to the transaction agrees to perform an obligation as illustrated in Eastham (Inspector of Taxes) v. Leigh London where the obligation to grant the lease was conditional on the satisfactory completion of the building works. Contingent conditions can be further sub-divided into conditions precedent and conditions subsequent.

85.         A contingent condition precedent is one which must be satisfied before the obligations of the parties pursuant to the contract becomes specifically enforceable and legally binding.  All other contingent conditions are conditions subsequent since performance or fulfilment of the condition is subsequent to the contract coming into existence which is binding on the parties.   In both contracts subject to contingent conditions subsequent and promissory contracts the condition only go to the performance of the contract and not to the coming into existence of a binding contract between the parties in the first place. 

Contingent contract subject to condition subsequent

86.         Issues surrounding the proper identification of contractual conditions was considered in Hunt v. Wilson by Cooke J. who observed:

"... the ambiguous labels precedent and subsequent, when applied to conditions, are seldom of real help in solving issues in this branch of contract law...they can be positively misleading unless the meaning of what it being said is made specific by explaining to what the condition in question is seen as precedent or subsequent."

87.         A contingent contract subject to condition subsequent operates so that the parties are contractually bound ab initio and there is no deferral or suspension of legal obligations coming into existence. If the condition subsequent specified in the contract occurs (or does not occur as the case may be) the contract is thereby terminated. Wylie & Woods "Irish Conveyancing Law" 4^th Ed. observe of this sub-category of contingent contracts; "...here the contract is made subject to a condition "subsequent" which has to be fulfilled before an obligation to complete arises.  Examples are conditions subject to the purchaser obtaining a mortgage loan, planning permission for specified development  or the consent of the landlord to the assignment of a lease." (13.66)

88.         In each case the outcome is contingent on the actual terms of the agreement.  In Parway Estates v. IRC Jenkins L.J. observed of arguments that certain obligations arising under the contract ought to be deemed to constitute conditions precedent effectively preventing a binding agreement coming into existence: "the performance by the vendors of those obligations no doubt had its effect on the value of the shares, but it did not alter the fact that the agreement was an agreement for the sale and purchase of the shares and nothing else.  It does not appear to me, looking at this agreement, that, upon its true construction, it imposes any conditions the fulfilment of which is a necessary preliminary to any effective agreement for sale and purchase."

89.         The decision of the Supreme Court in O'Connor v. Coady considered conditional contracts particularly one "subject to planning permission".  Geoghegan J. (p.282) noted that the parties had contended that the expression "condition precedent" necessarily imported the existence of a condition the effect of non-compliance with which would result in there being no contract of any kind coming into existence. 

Application of principles to the facts

90.          In the instant case the transaction was to take effect pursuant to the Memorandum of Agreement dated 21^st October 2015.  Where disposal is effected by a contract the time of disposal is the date that an unconditional contract is made, or, where the contract is subject to a condition precedent, the time when the condition is satisfied.  One has to bring a common sense approach to the analysis of the contract having due regard to the nature of the subject matter of the transaction and the routine and normal processes whereby title for what is in substance the subject matter of the transaction will typically come to vest in the purchaser or otherwise whereby the purchaser will come to acquire in all constituent respects the interest, rights and entitlement as contemplated pursuant to the contract instrument.

91.         One might usefully ask what was the understanding of the parties as of 22^nd October 2015  and did the agreement on its true construction envisage that the appellant remained free to enter a fresh agreement with a different purchaser, and, had he done so, was the original purchaser without any remedy, and what it was the parties understood was to be achieved in satisfaction of the consideration of €5 million. 

92.          A key issue, in light of the above analysis, is whether it can fairly be said, in light of the appellant's arguments, that by virtue of the terms of the Memorandum no binding agreement came into existence between the parties by reason of a condition which prevented the immediate formation of any contract. Courts lean against such a stilted construction unless there is clear and explicit language whereby the parties can be understood to have unequivocally agreed to defer the coming into existence of any contract between them in the first place until the occurrence of a specified event.

93.          As with most agreements for the sale of an asset or interest in property, various steps were anticipated to be taken by the parties  prior to completion. Neither the language of the Memorandum nor the evidence otherwise supports a proposition that the parties signed the agreement on 21 October 2015 subject to conditions precedent whereby no contract would immediately come into existence between them.

94.         The agreement does not specify that time was to be of the essence.  The parties entered into an agreement that involved a process that would culminate in completion which was expressed to take place in "2015".  It involved a series of steps to be taken by each party including the matters identified in the Second Schedule as well as discharge of the consideration moving from the promisee.

95.         A weakness in the appellant's argument is that it elides any material distinction between contracts subject to condition precedent and those subject to condition subsequent. If his contentions are correct and the facts disclose that a condition or event is identified which must be fulfilled or occur prior to completion, and that thereby the contract is to be deemed a conditional one for the purposes of s.542(1)(b), then per force virtually all contracts could be deemed to be conditional and, from a CGT perspective, would be deemed to fall within s.542(1)(b) since, for example, virtually all conveyances are subject to the general conditions of sale which include steps to be fulfilled prior to completion.

96.         Use of the phrase "subject to the provisions of this agreement" in Clause 1.1 merely encompasses ordinary terms of an unconditional contract which were particularly germane to the transaction in question namely the sale and disposition of the vessel together with the related tonnage.  The matters referred to in the Second Schedule when considered in the overall context of the Memorandum refer to ordinary terms of an unconditional contract which were of sufficient importance to warrant being itemised in the schedule.  They represent matters which the parties contemplated would be dealt with prior to completion of the concluded agreement.

97.          The structure of the agreement contemplated various steps being taken concurrently or in sequence by both parties in light of the legislative structure for the acquisition by the purchaser of tonnage on the sale of a fishing vessel. All were subsequent to a binding contractual relationship coming into existence between them.  The terms agreed by the parties to this synallagmatic agreement were to be fulfilled over a period of time; the acquisition of the vessel and its related capacity/tonnage was at various stages dependent upon a variety of steps and acts being performed by each party or by a third party at their behest and contemplated the readiness of both to perform their respective obligations. As a strict matter of law, the Appellant was not in a position to directly vest the tonnage he held in the purchaser. Under the statutory scheme the Appellant and the purchaser followed a well-established statutory process including obtaining approval from the Sea Fishing Authority (SFA), SFA cancellation of the vendor's sea fishing licence, and de-registration of the vessel as a sea fishing vessel.  The purchaser had to obtain from the SFA a non-operative sea fishing licence to enable re-registration as a sea fishing vessel in the new ownership. Finally, the purchaser applied for and obtained the SFA in its own name an operative sea fishing licence. Although the steps are quite specific, they merely reflect the statutory process whereby the purchaser acquired the vessel together with the capacity tonnage identical to that held and enjoyed by the vendor. 

98.         On its true construction the Agreement was intended to be immediately binding upon its execution on 21 October 2015. It was evident on the face of the Memorandum that both the vessel and its capacity were being disposed of under the agreement.   If, hypothetically, the licence had not been forthcoming for any reason then the previously binding contract would, subject to waiver, have been capable of being determined in that eventuality. Contingent conditions subsequent only go to the performance of the contract and not to the contract being binding on the parties.  Only contract subject to conditions precedent are "conditional" for the purposes of s.542(1)(b) TCA 1997.  Conditions subsequent do not render a contract "conditional" for the purposes of s.542(1)(b) of the TCA 1997 since they do not prevent contractual obligations arising from the moment the Agreement was concluded.

99.         The Appellant's arguments appear to contend that any contract under which completion is subject to the fulfilment of some contingent condition is conditional in nature and must be construed as subject to a contingent condition precedent which takes it within s.542(1)(b). A review of the authorities indicates that such is not the position and in practice only contingent contracts subject to conditions precedent are to be treated as "conditional" for the purposes of s.542(1)(b) of the TCA 1997.  In every case the question as to whether the contract is promissory or contingent, and if contingent whether the agreement is in truth subject to conditions precedent or conditions subsequent depends on the true construction of the contract in question.   In the instant case, the terms of the agreement, viewed in context, contain no words which support the assertion that the timing of the agreement for a "disposal" was being deferred or postponed.

100.     The Appellant is mistaken insofar his arguments suggest that because certain obligations had to be undertaken by the parties prior to completion that such was effective to bring the contract within s.542(1)(b) as a conditional contract.  There is a fundamental distinction between a term which is merely a condition precedent to liability to complete the operative provisions of the concluded agreement on the one hand and a term which is a condition precedent to the formation of any legally enforceable relationship between the parties on the other hand.  The Appellant's contention that the steps which were required to be taken prior to completion rendered this a contingent contract subject to condition precedent to the formation of any agreement, is not tenable.  It would only be so had it been established (which it has not) that the date of disposal was to be deferred (thus engaging s.542(1)(b)), as is clear from authorities such as Eastham v. Leigh.

The Doctrine of Frustration

101.     The statutory scheme is concerned with locating an operative date for the "disposal". It is a deeming provision. Section 542 deals solely with identifying the deemed timing of a "disposal". Thus, if a contract never proceeds to completion and there is ultimately no final completion, CGT ceases to be recoverable by Revenue if it transpired that the sale does not proceed to completion.  There would then by a retrospectively reviewed assessment be no disposal and therefore no liability to CGT.   A transaction might fail for any number of reasons frustration being but one of many hypothetical bases. 

Disposals pursuant to contract

102.     In the context of CGT and s.542 (1) the date on which the contract is completed or an asset is transferred is distinct from and does not determine the "date of disposal" which is identified by a process of statutory deeming.  If a contract never completes and the underlying asset never vests in the purchaser, then no CGT will ultimately be payable. The net effect is that s.542 (1) (a) operates so that when an owner contracts to sell an asset, and the contract is subsequently completed, the "disposal" for CGT purposes is deemed to occur when the contract was created and not when it was performed.

103.     The Appellant has failed to demonstrate that the Memorandum of Agreement executed on 21^st October 2015 was not entered into on the true date of the disposal. 

Conclusions as to the law

104.      Having duly reviewed the authorities with regard to conditional contracts referred to above they support the principle that contracts for the disposition of property can conveniently be considered to fall into two categories; promissory contracts of sale and contingent contracts of sale. 

105.     Contingent contracts fall into two sub-categories; firstly, agreements subject to a contingent condition precedent the fulfilment of which is a prerequisite to the formation of any binding contract of sale between the parties in the first instance.  The second category of contingent contract is one subject to condition subsequent.  The latter is subject to a condition upon which the performance of the material obligations under the contract is dependent prior to completion.  As such it contrasts with contingent contracts subject to condition precedent.  Very extensive expositions in regard same are to be found Property and Bloodstock Limited v. Emerton [1968] I Ch 94 and the judgment of the High Court of Australia in Perri v. Coolangatta.

The actual contract must be carefully considered before arriving at a conclusion

106.     The judgment of Isaacs J. in Maynard v. Goode [1926] 37 CLR 529 emphasises that each contract must be carefully considered before arriving at a conclusion as to its correct categorisation.  Likewise, in Gange v. Sullivan [1966] 116 CLR 418 at 441 the Australian court expressed the view that the effect of a condition must in each case be dependent on the language in which it is expressed "... a decision upon the meaning of one condition cannot determine the meaning of a different condition, the authorities cited do show a disposition on the part of courts to treat non- fulfilment of a condition ... as rendering a contract voidable rather than void in order to forestall a party to a contract from gaining some advantage from his own conduct in securing, or contributing to the non-fulfilment of a condition bringing the contract to an end."  To that might be added that identically worded or substantially similarly worded condition in two different contracts may yield different conclusions as to whether in substance the contract is contingent or promissory and if contingent whether, depending on the context, it constitutes a contingent condition precedent or a contingent condition subsequent. Much depends on the hinterland of salient facts disclosed by the evidence and the other relevant conditions and provisions in the contract in question when fully considered. 

107.     That such might occur was adverted to by Issacs J. in Maynard v. Good, 1926 (cited in Perri) where he noted that a provision: "... may be a condition precedent to the performance of a particular term of the contract ... But in another sense it is... a condition subsequent in relation, not to a particular term, but to the whole contract, as a binding obligation, that is, as a defeasance, because . . . failure of the (stipulation) would have entitled the vendor, to retire from the transaction altogether."

108.     In every case where an immediately binding contract comes into existence between the parties subject to the occurrence or a non-occurrence of a specified event whereby the contract will cease to be binding unless the party for whose benefit the contingent condition subsequent was inserted waives rights and elects to proceed notwithstanding non-compliance or non-performance.  As observed by Brennan J. in Perri:

"When vendor and purchaser are each under a contingent obligation to complete a contract of sale, the fulfilment of the contingency or the entitlement to avoid the obligation is of equal interest to both parties. Though the stipulation specifies the event upon the occurrence of which the obligations to complete cease to be contingent, the stipulation contains no promise that the event will occur. Until the event occurs or the purchasers waive the benefit of the stipulation."

109.     The authorities suggest that a condition precedent to the duty to complete a contract the performance of which lies entirely in the hands of a third party and is outside the control of the vendor or purchaser is generally construed as either a promissory contract subject to a condition being performed before specific performance can be ordered or contingent  contract subject to a condition subsequent. In neither case will the agreement be considered "conditional" within the meaning of s542 (1)(b) for CGT purposes. In both cases a binding contract comes into existence at the outset but the right to enforce it by specific performance does not arise until the condition is satisfied or waived by the party for whose benefit it was inserted:    As Mason J. observed in Perri :

"... the courts will tend to favour that construction which leads to the conclusion that a particular stipulation is a condition precedent to the performance as against that which leads to the conclusion that the stipulation is a condition precedent to the formation or existence of a contract. In most cases it is artificial to say, in the face of the details settled upon by the parties, that there is no binding contract unless the event in question happens.  Instead, it is appropriate in conformity with the mutual intention of the parties to say that there is a binding contract which makes the stipulated event a condition precedent to the duty of one party or perhaps both parties to perform. Furthermore, it gives the courts greater scope in determining and adjusting the rights of the parties. For these reasons, the condition will not be construed as a condition precedent to the formation of a contract unless the contract read as a whole plainly compels this conclusion."

110.     Merely because parties must take various steps after the date of signing the contract and prior to completion does not render a contract contingent in the manner contended for by the appellant. Promissory contracts are frequently subject to express  pre-completion terms which require to be complied with before specific performance can be ordered.  Pending performance within a reasonable time, there exists a binding contract between the parties from which neither is at liberty to withdraw at will. 

111.     In the instant case both parties executed the Agreement  on 21^st October 2015.  The decision in L'Estrange v. Graucob has been long cited with approval in this jurisdiction.  The key principle was stated by Scrutton LJ as follows:

"When a document containing contractual terms is signed, then, in the absence of fraud or, I will add, misrepresentation the party signing it is bound and it is wholly immaterial whether he has read the document or not."

112.     The decision was followed by the Supreme Court including in James Elliott Construction Limited v. Irish Asphalt Limited [2014] IESC 74 where the court also considered Curtis v Chemical Cleaning and Dying Co.  [1951] 1 KB 805 where a party's signature to a contract was held to be "irrefragable evidence of his assent to the whole contract, including the exemption clauses" (p.808)  I am satisfied that the core assessment of Scrutton LJ in L'Estrange remains good law in this jurisdiction albeit that subsequently the English Court of Appeal observed obiter in One World (GB) Limited v. Elite Mobile Limited [2012] EWHC 3706 that there might be an exception to the general rule in L'Estrange where the terms of the contract are onerous or unusual, thereby following a view previously expressed (obiter) in Inter Photo Picture Library Limited v. Stiletto Visual Programmes Limited [1989] QB 433. It follows as a matter of law that when both parties executed the Memorandum on 21 October 2015 they were bound contractually by its terms.

113.      The agreement of 21 October 2015 on its face was apparently binding and  unconditional. Since the condition precedent contended for by the appellant was not expressly stated in the agreement, the burden of proof rested on him as the party asserting its existence, to establish that, on the balance of probabilities, the contract was subject to a condition precedent which had not been fulfilled until on or after 1 January 2016.

114.      More particularly, it was incumbent on him to establish by probative evidence both that the written agreement of 21 October 2015 did not contain the entire agreement between the parties and that it had been agreed between the parties that there would be a condition precedent that had to be fulfilled before any contract came into effect.

115.   No evidence was adduced of the existence of such a precondition as a term of the Agreement such as would establish its existence on the balance of probabilities.  In consequence, there was a valid binding contract operative from 21 October, 2015.

116.     Application of the above authorities to the facts of the instant case lead to a conclusion that the Memorandum of Agreement of 21^st October 2015 was not and was never intended to be a contingent contract subject to condition precedent.  Instead, a binding concluded agreement came into existence between the parties upon execution of same.  As such, same gave rise to a "disposal" within the meaning of s.542(1)(a) of TCA 1967 on 21^st October 2015.

117.      The terms are, on balance, most consistent with a promissory contract - but even if it could be categorised as a contract subject to condition subsequent  the outcome is the same - as such a contract is manifestly not  conditional within the meaning of  s.542(1)(b) and so, the provisions of that subsection are manifestly not engaged and cannot be availed of by the Appellant and were never applicable to his circumstances in light of the contract and all the surrounding circumstances. 

118.      I come to this conclusion notwithstanding the arguments of the appellant that several steps prior to completion involved acts and decisions being made by third parties over which the Appellant had no control, as outlined in para. 7 of the appellant's written submissions and including, but not limited to, s.4 Fisheries (Amendment) Act 2003.  Taking the appellant's arguments at their highest it is nonetheless patent that the parties intended to enter into an immediately binding agreement on 21^st October 2015.  One need simply ask the question had the appellant asserted the following day that he remained entirely free to sell Glór na dTonn and its related capacity/tonnage to a different purchaser to clearly see how unstateable the appellant's position is. Had he proceeded to do so it would have been a clear breach of the Agreement.  There was no clause in the agreement and nothing in the documentation put before the court to support the proposition that any condition precedent to formation of a contract between the parties existed in this case. 

119.     The procedural and licensing obligations were nothing more than "mere matters of title" and promissory conditions typical of a promissory agreement or steps requiring to be dealt with prior to completion.  Authorities such as Property and Bloodstock Limited v. Emerton, Manchester Diocesan and Maynard v. Goode support that conclusion.  Even if the agreement could be construed as contingent and subject to a condition subsequent the outcome remains entirely the same insofar as neither eventuality give rise to an entitlement on the part of the Appellant to contend that the agreement falls within s.542(1)(b) as a "conditional" contract for CGT purposes. Any conditions in the Memorandum were not precedent to the formation of a binding contract becoming operative immediately upon execution  of the Memorandum on 21^st October 2015.

120.     Nothing has been identified which warrants disturbing the substantive findings and conclusions of the High Court and the answer of the learned judge to each point of law raised pursuant to s.949Q TCA.

 

 

 

Observations on the grounds of appeal

121.     Ground (1) That the judge erred in finding that the contract for sale of the vessel was not a conditional contract within s.542(1)(b) TCA 1997.

I am satisfied for all the reasons outlined exhaustively above that this is not correct.  The High Court was correct in its conclusion. The contrary arguments are entirely artificial.

 Ground (2)    The judge erred in holding that "the conditions of the contract for the sale of the vessel...if any, were satisfied prior to 1^st January 2016" 

122.     This contention substantially misconstrues the High Court judgment.  The observation made at para. 56 that "there are no conditional words used in this agreement" must be understood in its context. The High Court judge was considering when a binding contract first came into existence. The essential question was whether the agreement of 21^st October 2015 was subject to a contingent condition precedent so as to fall within s.542(1)(b) TCA.  Extrapolating selective excerpts from the judgment for a contrary proposition is unpersuasive. The "conditions" contended for by the appellant were "mere matters of title" routinely found in promissory contracts - or, at its highest, conditions subsequent to be addressed post contract and prior to completion. No condition existed to preclude the coming into existence of a contract between the parties on 21^st October 2015.  This ground of appeal fails. 

Ground (3) The judge erred in concluding "There were no conditional words used in this agreement". 

123.     The focus of the trial judge was to determine whether there were conditional words in the Memorandum of Agreement of 21^st October 2015 to bring it within s542(1) (b) TCA. Only "conditional words" to show that the contract was subject to condition precedent (i.e. that no contract came into existence upon its execution) were relevant. One must consider more fully the excerpt from which this ground of appeal is extrapolated which says|:"Nowhere does the agreement say that the sale is subject to the obtaining of any of the documents set out in the Schedule.  It seems to me that the associated documentation and in particular the Bill of Sale, a document under seal, points to the transaction having been concluded."  One might cavil with phraseology such as "conditional words" rather than "conditions precedent to contract". Yet the judge's reasoning is very clear and entirely correct-there were no words giving rise to a condition precedent to contract in the agreement so as to engage s542(1)(b). This ground of appeal is not made out. 

 Ground (4) The judge erred in holding that the time at which the contract became enforceable was not an issue which the Tax Appeals Commissioner should have taken into consideration in interpreting the tax code. 

124.          Section 542 is directed towards identifying the date on which a binding contract was made. "It envisages an interest being disposed of and acquired".  The core issue was did a "disposal" take place and, if so, when did it occur.  The date when a concluded agreement became specifically enforceable is an entirely different issue.  Insofar as the judgment concludes that s.542(1)(b) is solely directed to the issue of conditionality it was a correct assessment.  Considerations as to "business efficacy" were wholly extraneousness to the exercise to be undertaken, as the judge correctly noted.

125.          There is no necessity to resort to the principle of "business efficacy" in the instant case.  The only justification for drawing it into the argument is to somehow enlarge the arguments available to the Appellant in support of his contention that an individual in the position of the Appellant would have not entered into a binding contract until on or after 1^st January 2016 when entrepreneurial relief was available.  The High Court correctly declined to indulge such retrospective rationalisation.  The authorities do not support the Appellant's arguments on business efficacy. Importing a proposition that as a matter of business efficacy the parties would not have agree to the transfer of the boat without the transfer of the fishing rights and vice versa misses the point and is nihil ad rem.  

Ground (5)  The judge erred in holding that the requirement to furnish all closing documents was procedural and not conditional.

126.     If it was intended by the parties that the obligation to furnish "all closing documentation" was a contingent condition precedent to any contract coming into existence between them that would be certainly most unusual and one would reasonably expect at a minimum that a special condition would be inserted into the contract to explicitly make this intention clear.  There was no such term or condition in the Agreement. The items in the Second Schedule were in common parlance "mere matters of title".  A binding agreement came into existence from execution of the Memorandum of 21^st October 2015.  There is no substance to or basis for this ground of appeal which fails.

Ground (6) The judge erred in stating at para. 58 that if completion documents set out in Second Schedule to the agreement were not received there would be no contract.

This remark in the judgment I take to be substantially obiter.   This contract ultimately completed. The judge was directing his mind towards specific enforceability a matter that is of no relevance to the issue of establishing a "disposal" for the purposes of s.542(1)(a) of the TCA 1997.  Para. 58 ought to be read in tandem with other relevant sections of the judgment including 36 and 56.  If the sale did not complete within a reasonable time because of the non-delivery of a document listed in the Second Schedule for reasons wholly outside the reasonable control of either party then either could have brought the agreement to an end. The judge's meaning is obvious to the fair-minded reader– there would have been no specifically enforceable contract if the documents in question were not received. That statement was correct. This ground of appeal is not made out.

Ground (7)   The judge erred in holding that the fundamental requirement in the contract for the purchaser to have obtained fishing rights from the Fishing Licence Authority had not been expressed between the parties.

127.      It is not appropriate to construe contractual terms as amounting to contingent conditions precedent which preclude the coming into the existence of any agreement between parties pending the occurrence of a specified event unless the language in the agreement supports that contention and makes clear that such was the intention of both parties at the time the agreement was concluded. There is much authority for that proposition including Perri, Property and Bloodstock Limited and Maynard.  There was no evidence from the purchasers that such was their understanding of the agreement.

128.     The contract did not contain any condition which suspended the coming into existence of a binding agreement between the parties pending the purchaser obtaining a fishing licence from the FLA.  The decision of Murphy v. O'Toole is not of assistance to the Appellant. No principle was identified within it which supports a proposition that no binding agreement arose between the parties on 21^st October 2015. 

 Ground (8)  "The judge erred in holding that it was not necessary to imply as a matter of business efficacy that the contract for the sale of the vessel was subject to the purchaser being allocated fishing rights by the Fishing Licence Authority." 

129.       This precise formulation of words does not appear in the judgment. This ground appears to rely on the High Court decision in Murphy v. O'Toole where the High Court made clear: "For a contract to be a conditional contract .... such a condition must be express between the parties, and the Court will not imply a financing term, as such a term was not necessary to give business efficacy to this contract which was perfectly capable of being made without such a condition, albeit that performance of the obligation of one party required financing."  The proposition that there was a necessity to imply that the contract was subject to the purchaser being allocated fishing rights by the FLA as a matter of "business efficacy" is merely to import a retrospective rationalisation so as to artificially elevate mere matters of title in the agreement of 21^st October 2015 in a manner so as to locate the contract within the narrow ambit of conditionality in s.542(1)(b).  Had the sale not complete for bona fide reasons outside the parties' control then either could have brought the agreement to an end. This does not detract from the legal reality that a binding agreement was concluded between them ab initio.  As authorities such as Maynard make clear, if the contract ceased to be binding the importation of concepts such as "business efficacy" would be entirely irrelevant. There is no legitimacy in attempting to imply a term as to business efficacy to this contract which was perfectly capable of being made without such a condition.

130.     The assertion that "as a matter of business efficacy it must be implied that until the assumption of fishing rights by the purchaser which was in the gift of a third party the conditional agreement would not proceed to conclusion.", is not correct.  It is not accurate to say that the rights were "in the gift of a third party" insofar as it suggests that the FLA was entirely at liberty to gratuitously refuse to grant the allocation/licence to the purchaser.  There are well established principles governing the operation of s.4 of the 2003 Act.  The arguments being advanced by the Appellant are significantly overstated in this regard. The Appellant is incorrect in suggesting that the issue of whether the conditional agreement will proceed to a conclusion is a material fact in identifying the date of "disposal" for the purposes of CGT.  The date of completion is not a material consideration in the context of s.542(1), it is the date of contract.  Many contracts for sale do not ultimately culminate in completion.  The deemed date of "disposal" under s.542(1) may never ripen into a right in the Revenue Commissioners to enforce payment of the CGT if completion never occurs. 

131.     Elements of the transaction were in the hands of a third party. However, any conditionality was, at best, subsequent, as decisions such as Manchester Diocesan make clear. On its true construction it was a promissory contract with matters of title requiring to be addressed prior to completion identified in the Second Schedule. "Disposal" is a deemed date ascertained by operation of statute occurring when a binding agreement is concluded. The binding agreement here was concluded, on any version of the facts and in light of all the authorities referred to above, on 21^st October 2015. 

132.     This ground of appeal fails.

Ground (9)   The judge erred in holding that Lyon (Inspector of Taxes) v. Pettigrew was more persuasive than the case law referred to by the applicant. 

133.      The decision of Walton J. in Lyon had been considered by the High Court in  Murphy and was relevant and was appropriately considered by the trial judge ( e.g. para. 49,60).  Whilst the taxis and their licences were beneficially vested in the vendor in that case and he was in a position to pass title to both to the purchasers, in the instant case  the fishing licence was not assignable directly, rather the legal process was availed of by the appellant whereby a fishing licence with identical tonnage was to vest in the purchaser by virtue of the statutory scheme and section 4 of the Fisheries (Amendment) Act, 2003. 

134.      The comprehensive analysis by Wilson J. in Lyon of the issue of the identification of the "date of disposal" and his consideration and treatment of the significant decision in Eastham (Inspector of Taxes) v. Leigh London were highly relevant to key issues in the case stated and properly considered by the trial judge in arriving at the his conclusions.  The said decision was quite properly accorded importance by the judge.  There is no validity in this ground of appeal.

Ground (10)   The judge erred in law in construing s.542(1)(b) by reference to the Revenue Manual which was opinion as to the law and inadmissible. 

135.       The judge alluded to the manual (paras. 47, 61).  The manual amounts to opinion and is not law. He considered it "informative" (para.61) as regards s542 (1)(b). Leaving the manual aside completely, there were compelling factual and legal bases identified in the judgment which warranted the judge arriving at his conclusion and answering the questions in the case stated in the manner in which he did to reject the claim that the contract was "conditional" within s.542 (1) (b). The appellant adduced no probative evidence to support his claim that this was a contingent contract subject to condition precedent such that no contract at all existed between the parties until the matters in the Second Schedule were satisfied. This ground of appeal is not made out.

Ground (11)  The judge erred in holding that as the completion date was not inserted in the Memorandum of Sale, it was contemplated by the parties that it would take place in 2015, since that is the only date which appears in it. 

136.     The observation was factually correct. Clause 3.1 in the contract deals with "completion" and states, inter alia, "... completion shall take place on the     day of     2015, subject to the provisions of clause 1.2 hereof."  There is no "clause 1.2" in the Memorandum.  Though time was not made of the essence the terms of the Memorandum indicate that the parties contemplated that completion would take place in 2015. 

137.      It bears repetition that the date of completion is irrelevant to the statutory exercise of identifying the date of assessment of liability for CGT under s.542(1). What matters is the date of "disposal".  In many transactions there is a delay between the date of the agreement to sell and the date of final completion of the contract. This ground of appeal fails. 

Frustration

138.      The Appellant asserted, in the context of Question 4 of the s.949AQ case stated that reference to "frustration" of the contract was erroneous. Reliance was placed on Ringsend Property Limited v. Donatex Limited and Bernard McNamara that the defence of frustration is one of limited application and narrowness.... "arises is circumstances where performance of a contract in a manner envisaged by the parties is rendered impossible because of some supervening event not within the contemplation of the parties." 

139.     The totality of the appellant's arguments fails to gainsay the High Court judge's pragmatic observations at para.36 of the judgment:

"The word "frustrated" exercises the appellant. However, whether one uses the word frustrated or not, or concluded some other term to indicate that the contract is lost, the thrust of what the Commissioner has said is clear. If the purchaser did not get a licence and the fishing rights, there would be little point in the sale completing, because the purchaser would not be buying what the vendor had to sell."

 

140.     The purchaser would have been in a position to elect to treat the contract as at an end if for any reason outside the control of the parties the documents in the Second Schedule were not forthcoming.  This does not impact on the fact that a deemed "disposal" had immediately occurred upon execution of the Memorandum of 21^st October 2015.

141.     The arguments concerning frustration are  nihil ad rem.  The circumstances whereby the contract could  have ceased to exist are myriad.  Hypothetically, it might have occurred by discharge, by agreement, by rescission, by release, by a breach, failure to perform, by renunciation or, indeed, by frustration. Instead, this contract completed in January 2016.

142.     If for any reason the sale had not completed and the vessel and related tonnage were never acquired by the purchaser then no CGT would have been recoverable by Revenue because no vesting would ultimately have taken place in the purchaser as could be demonstrated with effect from the date that the contract between the parties was at an end. 

143.     The answers of the learned High Court judge to the questions in the case stated  pursuant to s. 949AQ TCA, 1987 are correct and ought not be interfered with. This appeal falls to be dismissed.  

Costs

144.      The Respondent is presumptively entitled to its costs in respect of this appeal in circumstances where the Appellant has been wholly unsuccessful, having due regard to O.99, RSC and ss. 168 and 169 of the Legal Services Regulatory Authority Act 2015, as amended.  If the Appellant contends for a different order as to costs he is permitted within a period of 14 days from the date of delivery of this judgment to file in the Court of Appeal Office and serve on the Respondent written submission not to exceed 1,500 words in length identifying all grounds supporting his contentions, in which event the Respondent will have a further 14 day within which to file and serve any response not exceeding 1,500 words.  The court will then consider same and issue its determination the issue of costs.

145.     As this judgment is being delivered electronically Faherty and Meenan JJ. have authorised me to indicate that they agree with same and the orders proposed.

Result:     Appeal Dismissed