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1. The Plaintiff's claim for £378,522.76 for tax and interest was heard by O’Higgins J on the 26th February, 1999. Counsel are agreed that the Plaintiff has established all matters necessary to secure judgment subject to the determination of a challenge by the Defendant to the effect that the combination of the several statutory provisions deployed by the Plaintiff in the circumstances set out below are repugnant to several articles of the Constitution, or, alternatively, the implementation by the Plaintiff of its powers under these statutory provisions constitutes an infringement of the Defendant’s rights under the same articles.

2. The precise question to be determined has not been formulated but points of claim and points of defence have been delivered which make it clear what are the legal issues between the parties.

3. In addition, I gave leave to Counsel for the Defendant with the consent of Counsel for the Plaintiff to raise a further issue of statutory interpretation as described hereunder.

4. On the 29th May, 1997 in separate proceedings brought by Michael F. Murphy against the Defendant in the matter of The Proceeds of Crime Act, 1996, I made an Order pursuant to Section 2 of that Act prohibiting the Defendant from disposing or otherwise dealing with or diminishing the value of freehold property in County Dublin, a Ford Fiesta motorcar, and substantial amounts of money standing to his credit in two building societies.

5. On the 5th August, 1997 the Plaintiff issued assessments for tax and surcharge for late submission of returns for the tax years ended 5th April, 1989 to 5th April, 1996 inclusive and these were received by the Defendant on the 7th August.

6. The statutory thirty day time limit within which the Defendant was entitled to appeal these assessments expired, accordingly, on 4th September, 1997. On the 14th August, 1997 the Defendant’s then Solicitor wrote to the Plaintiff indicating an intention to appeal.

7. On the 25th August, 1997 the Plaintiff replied to the Defendant’s Solicitor enclosing copy of the same date of their letter to the Defendant pointing out in effect that no appeal could be made unless a return was made by the Defendant accompanied by payment of the amount of tax admitted due and that in default of compliance the assessments would become final and conclusive within the relevant statutory time limits. By letter of 2nd September, 1997 the Defendant’s accountant wrote to the Plaintiff appealing the assessment enclosing returns of income for each of the relevant years which acknowledged total income tax liability of £106,668.98. In that letter the Defendant’s accountant stated:-

8. By letter of the 9th September, 1997 the Plaintiff replied acknowledging receipt of the accountant’s letter, noting that the Plaintiff did not “hold” any money of the Defendant, pointing out that money was held pursuant to an Order under The Proceeds of Crime Act, 1996 and that a remedy might be available to him under Section 6 of that Act.

9. The letter further pointed out that a valid appeal must be accompanied by the admitted amount due submitted within thirty days of the notice of assessment and also pointing out that statutory provisions existed for admission of a late appeal. It concluded by stating that no valid appeal had been lodged and that the assessments “ have now become final and conclusive” , and that arrangements were being made for service of demands on the Defendant.

10. By letter of the 19th September, 1997 the Defendant’s accountant appealed against the refusal to accept his appeal pursuant to the relevant statutory provisions on the grounds that their refusal to accept the Defendant’s notice of appeal dated 2nd September, 1997 “ having regard to the particular circumstances of this client, is contrary to law” .

11. By letter of the 22nd September, 1997 the Plaintiff acknowledged this letter and pointed out that any relevant application should be addressed to the offices of the Appeal Commissioners.

12. This letter was in turn acknowledged by the Defendant’s accountant by letter of 22nd September, 1997.

13. By letter of the 27th April, 1998 the Appeal Commissioners advised the Appellant and the Plaintiff (as respondent) of the date, time and place of the hearing being the 25th June, 1998.

14. On that date there was no attendance by or on behalf of the Appellant (the Defendant) and by letter of 3rd July, 1998 the Plaintiff wrote to the Defendant pointing out to him that as there was not attendance by him or on his behalf his appeal against the refusal of the inspector to admit his appeal “ is not gone by default”. On the 13th of October, 1998 these proceedings were commenced by the issuing of a summary summons out of the Central Office of the High Court.

15. The essence of the submissions made on behalf of the Defendant by Patrick Hunt, BL, was that because the combined effect of the relevant statutory provisions contained in the Criminal Assets Bureau Act, 1996, the Proceeds of Crime Act, 1996 and the Taxes Consolidation Act, 1997 was to enable the Plaintiff to deprive the Defendant of access to his monies which access was essential to enable the Defendant to make a valid appeal on or before the 4th September, 1997 against the Plaintiff’s assessments of the Defendant’s liability to tax, the consequence was that the relevant sections of those Acts were repugnant to specified articles of the Constitution, primarily those relating to access to the Court and the safeguarding of the Defendant’s property rights. More specifically, in the Defendant’s points of claim the issue for this Court was specified as follows:-

16. In addition to the foregoing point, as indicated earlier, I gave the Defendant liberty to argue that Section 957(2)(a) of the Taxes Consolidation Act, 1997 did not apply in the case of his client’s appeal at all because the assessment was not made “... in accordance with Section 919(4) or 922...” at all as specified therein, but, rather, was made in accordance with the provisions of Section 58 of the same Act of 1997.

17. Accordingly, it is necessary to set out Section 58 which I now do as follows:-

18. If the Defendant is correct in his submission in relation to the meaning of Section 957(2)(a) then it follows that the Plaintiff was incorrect in disallowing his original appeal and accordingly the Plaintiff would not have established the necessary proof to entitle it to judgment in these proceedings. Accordingly, in compliance with the well-established jurisprudence in relation to cases involving challenges to the constitutional validity of statutes, I proceed to deal with the non-constitutional challenge first.

19. In the present case it is clear that the Defendant, being the chargeable person referred to in Section 957(2)(a) of the Taxes Consolidation Act, 1997, made default in delivering a return.

20. In these circumstances the inspector made an assessment which the Defendant disputes. The question which now arises for determination is whether that assessment was made “ in accordance with Section ... 922” of the Act of 1997 (the parties are agreed that Section 919(4) is irrelevant to the present case) as submitted by Mr. Nesbitt, SC, on behalf of the Plaintiff, or whether, on the contrary, it was made in accordance with the provisions of Section 58 of the same Act as submitted by Mr. Hunt, BL, on behalf of the Defendant.

21. The background to the enactment of Section 58 was that in this country judicial authority had decided that illegal earnings should not be chargeable to tax - the position here being different to that adopted in the United Kingdom where apparently the Judges accepted that the Irish sense of outrage at the very notion was greater than that obtaining on the other side of the Irish sea.

22. Presumably by 1997 our law makers had decided that even in this country the sense of outrage had abated to a sufficient extent to support the enactment of Section 58.

23. In this context Mr. Nesbitt, SC, submitted that Section 58 merely declared that from thenceforward illegal earnings were to be chargeable to tax but that the charging section was not Section 58 but rather Section 12 which provides that income tax “ shall... be charged in respect of all property, profits or gains respectively described or comprised in...” the schedules including Schedule D. Case IV of Schedule D was a “catch-all” case relating to annual profits or gains which did not come within any of the other cases. Mr. Nesbitt submitted that the tax in the present case was not chargeable under Section 58 but rather in or in accordance with other provisions of the tax code.

24. Mr. Hunt, BL, submitted, to the contrary, that it is clear that Section 58 is a “charging section”. Subsection (2) commences with the words “ notwithstanding anything in the tax Acts, any profits or gains which are charged to tax by virtue of Subsection (1)... shall be charged under case IV of schedule D and shall be described in the assessment to tax concerned as ‘ miscellaneous income’ ...”.

25. When one comes to Subsection (2) there is, indeed, a reference to those profits or gains “ which are charged to tax by virtue of Subsection (1)...” . Having regard to the fact, however, that further on in the same subsection the text provides that (those profits or gains) “shall be charged under Case IV of Schedule D and shall be described in the assessment to tax ” concerned as “ miscellaneous income” it is my view that the first sentence of Subsection (2) goes no further than to acknowledge that “by virtue of Subsection (1)” the profits or gains concerned fall to be charged: the subsection proceeds later to provide that they shall be charged under Case IV of Schedule D.

26. In my opinion the correct interpretation of Section 58 is that by virtue of Subsection (1) the relevant profits or gains fall to be charged (become “chargeable”) but that the charging subsection is Subsection (2). I say this because the language effecting the charge in that subsection (“ shall be charged under Case IV of Schedule D”) is the same language as is used in the main charging section of the Act, namely, Section 12 which provides where relevant that “ income tax shall,... be charged in respect of all property ...”. The use of the word “shall” does not import, in my view, a reference to another section where the actual charging is effected. Accordingly, in my view, the relevant profits or gains are charged by Section 58(2) which also acknowledges, so to speak, that this is done “ by virtue of Subsection (1)” .

27. But this does not, to my mind, really address the key question which is whether the assessment made by the inspector and referred to in Section 957(2)(a) of the Taxes Consolidation Act, 1997 was made “ in accordance with Section... 922” , or otherwise.

28. Where relevant it provides:-

29. It seems to me that the effect of Section 957(2)(a) is to make applicable the relevant provisions of Section 922 not only in the situation identified in that section itself, but also in the situation identified in Section 957(2)(a): that is, in a situation which includes a case where there has been default. There was a default by the Defendant and the inspector made his own assessment. It appears to me that the assessment was made “ in accordance with” Section 922 - that is in such sum as according to the best of the inspector’s judgment ought to be charged on the Defendant. I do not think that the assessment was made in accordance with Section 58 because insofar as that section has anything to say in relation to assessment (as distinct from chargeability to tax) it seems to identify assessment with being charged under case IV of schedule D (which arises under Section 18). This arises because Subsection (2) provides:-

30. The reference to “so assessed” appears to me to identify the notion of assessment with the charging of those profits and gains under case IV of schedule D.

31. The assessment by the inspector in the present case was not, in my view, done “ in accordance with” Section 58 or indeed Case IV of Schedule D but in accordance with Section 922 given that the circumstances were that there had been a default in the delivery of a return and therefore the inspector had to make the assessment in accordance with the best of his judgment rather than the details appropriate to an assessment under Case IV of Schedule D.

32. That being the case, in my view the provisions of Section 957(2)(a) do apply with the effect that no valid appeal from such assessment can lie against it until the money admittedly due and owing on the relevant return on behalf of the Defendant has been paid. Accordingly, in my opinion the Plaintiff was correct in stating in its letter to the Defendant's accountant dated the 9th September, 1997 that no valid appeal had been lodged and the assessments had become final and conclusive.

33. In these circumstances it is necessary for me now, to proceed to consider the constitutional points.

34. Mr. Nesbitt, SC, on behalf of the Plaintiff submits as a preliminary point that the Defendant has no locus standi to assert the various challenges either to the constitutionality of the sections identified or as to the application thereof by the Plaintiff.

35. He says that the Plaintiff has brought these problems on himself. Not only had he made default in making a return where he was obliged so to do, but he must be regarded as having known that in such circumstances he would be faced with tight time limits.

36. In fact a number of statutory channels were open to him whereby he could have avoided the very mischief which he now seeks to lay at the door of the statutes or the implementation thereof by the Plaintiff.

37. In the first place he could have, and in fact did, appeal the inspector’s assessment. If it is true as the Defendant’s Affidavit appears to assert, notwithstanding that it is sparse on information, that his admitted earnings were not from illegal sources, then it was open to the Defendant to make an application to Court under Section 2(3) of the Proceeds of Crime Act, 1996 seeking to discharge or vary the initial freezing order which was made on the 29th May, 1997.

38. In this context it is appropriate that I examine with some degree of particularity the Affidavit of the Defendant himself sworn on the 25th February, 1999. At paragraph 2 he swears that he is not indebted to the Revenue Commissioners in the amount set out in the summary summons as alleged or at all. At paragraph 4 he says:-

39. He also refers to a copy of a notice of appeal served on his behalf by Mr. Shine.

40. Whilst he does not, in terms, swear that none of his income was the proceeds of illegal activity, it was incumbent on him when making a return to disclose all his income and in the present case none is disclosed as being the proceeds of crime.

41. Mr. Hunt, BL, in this context, submitted that it was not open to Mr. Kelly to swear generally that his income was not illegal because he was an unlicensed trader.

42. I consider that if this was the only detail inhibiting Mr. Kelly from swearing, in the context of these proceedings, that none of his income was the process of illegal activities, he could well have made this averment in his Affidavit drawing the necessary distinction between the category of illegal activity involving drug dealing alleged against him in the proceedings taken by Chief Inspector Michael Murphy and illegal activity arising from unlicensed street trading.

43. In light of this it appears that the Defendant’s posture so far as his evidence goes is that his income was not the proceeds of crime, but perhaps was tainted with some degree of illegality in the sense that it derived from street trading which was conducted without a street trader’s licence.

44. In those circumstances a ready remedy was available to the Defendant under the provisions of Section 2(3)(a) of the Proceeds of Crime Act, 1996 which provides where relevant that:-

45. The reference to subparagraph (i) or (ii) refers to property constituting directly or indirectly the proceeds of crime or property acquired with or in connection with property that was the proceeds of crime.

46. No such application was made at any time after the original freezing order was obtained on the 29th May, 1997. If such an order had been open to the Defendant, and obtained by him, then Mr. Nesbitt submits that it would have had available to him - at least insofar as the impact of any “freezing order” obtained by Chief Superintendent Murphy is concerned - funds which could have accompanied his appeal against the Plaintiff’s assessment thereby saving its invalidity.

47. Accordingly, the mischief now complained of is the result not of the Acts themselves or of the application of the Acts by the Plaintiff but rather of the failure of the Defendant to avail himself of this remedy.

48. Furthermore, it is submitted that an application could have been made by the Defendant pursuant to Section 6 of the Proceeds of Crime Act, 1996 requesting the Court to vary or discharge the interim order to enable him to pay “ necessary expenses” . Mr. Hunt, BL, submits that it is not clear that this phrase includes monies admittedly due on foot of a return in the context of an appeal against an assessment.

49. Clearly the phrase “ necessary expenses” is sufficiently broad to include such a payment because it cannot be argued that the expense of paying one’s admittedly due tax is not a “ necessary expense” in the context of legislation which includes provisions in relation to the collection of tax chargeable on the proceeds of illegal activity. If there is a doubt about this, so that one reading would produce an unconstitutional result and another a constitutional result, then clearly that doubt must be resolved in favour of producing the constitutional result. If, therefore, an unconstitutional interpretation or application of the statute could be saved only by an interpretation of the phrase “ necessary expenses” which was wide enough to include the payment of admittedly due tax in certain circumstances, then such an interpretation is the correct one. The matter has not been put to the test explicitly in the present case because no application was made by the Defendant pursuant to the provisions of Section 6.

50. Mr. Nesbitt makes a further point. He says that the Defendant did actually appeal against the Plaintiff’s assessment and did, further, actually appeal against the refusal to accept such appeal as valid. However, he never proceeded with that second appeal to its full determination. Rather he permitted it to go by default and accordingly, once again, his present predicament is the result of his failure to avail himself of the built-in procedures in the tax code which in turn would have allowed him access to the Courts by way of appeals or case stated on a point of law.

51. Mr. Hunt, BL, in regard to this latter point says that such an appeal would have availed the Defendant nothing because there was nothing that the Appeals Commissioners could do.

52. In my view, the Defendant has not availed himself of the relieving procedures by way of appeal within the tax code itself or from the system set up thereunder to the Courts. He would, in my opinion, have the Court accept that his income is not the proceeds of illegal activity as alleged by the Plaintiff. If that were the case he could at any time between the 29th May, 1997 and the institution of these proceedings on the 13th October, 1998 have applied for a discharge of the “freezing order”. Accordingly, it was not the freezing order itself but the failure of the Plaintiff to apply to have it lifted that caused him not to have access to his funds for the purpose of making a valid appeal against the Plaintiff’s assessment.

53. If, on the other hand, the Plaintiff’s income was, contrary to what he would have the Court believe, the proceeds of crime, then it was still open to him to make an application under Section 6 of the Act of 1996. I do not think it is open to the Defendant in this context to argue for an “unconstitutional” interpretation of the phrase “ necessary expenses” in order to establish the unconstitutionality of either portions of the relevant statutes or the application thereof by the Plaintiff. As Walsh J said in The State (Quinn) -v- Ryan, (1965: IR: 70): “ The true test is to discover what is intra vires the statute ”. Once again, in my opinion, it was the fact that the Defendant did not avail himself of this avenue of relief that was the cause of the non-availability to him of his monies in the context of making a valid appeal (whether in time or late) against the assessment of the Plaintiff.

54. In considering this latter aspect I accept from Mr. Hunt his experience that the Plaintiff has never to his knowledge consented to a payment out under Section 6 of the Act of 1996. To that extent, any suggestion by the Plaintiff that a “consent” order would have been available must be looked at with caution. On the other hand, however, this does not alter the fact that the channel of access to his client’s money via Section 6 existed and would in my view have provided, in principle, an appropriate remedy whereby the Plaintiff could have procured the release of sufficient funds to enable him to make a valid appeal, even if his application had been resisted. The mechanism is there to be availed of by the Defendant and the proximate cause of his inability to pay the appropriate amount admittedly due with his appeal against the Plaintiff’s assessment was his failure to avail himself of that remedy.

55. In reaching the foregoing conclusion I have had regard to the authorities opened by Counsel and in particular to the decision of McCracken J in Coughlan -v- Ireland & The Attorney General & Ors ., (unreported: 12th July, 1995) where he said at page 8:-

56. In all the circumstances, I accept the Plaintiff’s submission that the Defendant has no locus standi to challenge the validity of the impugned sections of the statutes referred to in the proceedings, having regard to the provisions of the Constitution or to claim that the Plaintiff’s application thereof amounted to an infringement of his constitutional rights. In those circumstances I conclude that the Plaintiff’s challenge fails and given that both parties are agreed that in the event of such failure the Plaintiff is entitled to judgment in the appropriate amount a decree will be made for that sum. I will refer to Counsel for the precise figure.