Introduction

In O’Dwyer v The Revenue Commissioners [2025] IEHC 490, the High Court (Kennedy J) allowed an appeal by case stated from a determination of the Tax Appeals Commission (TAC) concerning a substantial Capital Gains Tax (CGT) assessment arising on the 2006 sale of a mixed-use property. The case turns on whether a 1986 deed (the “Indenture”) by which the Appellant’s father transferred the property to her “in fee simple” but expressly reserved to himself, for life, the full right of residence and occupation and the right to the rents and profits, created “settled property” for the purposes of the CGT code.

The Commissioner had held that the daughter acquired the legal and beneficial interest in 1986 with only a personal burden in favour of her father; therefore she was liable to CGT on the 2006 disposal. The Appellant contended that the father’s broad lifetime reservations created a settlement under the Settled Land Act, 1882, and that for CGT purposes the trustee (the father) was the person on whom the gains would accrue on deemed disposal events under Part 19, Chapter 3 of the Taxes Consolidation Act 1997 (TCA).

The High Court answered both stated questions of law in favour of the Appellant, finding that the Indenture did create settled property and that the daughter did not acquire beneficial ownership in 1986; instead, the father retained a lifetime equitable interest. The Court reaffirmed National Bank v Keegan [1931] IR 344 as binding authority in Ireland (pre-2009) and distinguished authorities treating general rights of residence as merely personal rights. The decision has notable ramifications for pre-2009 estate planning deeds that reserve both residence and income to the transferor, and for the allocation of CGT liabilities on disposals of such property.

Summary of the Judgment

• The Court held that, construed as a whole and in its factual matrix, the 1986 Indenture transferred legal title to the daughter but reserved to the father, for life, the substance of ownership: the full right of residence and occupation and the entirety of rents and profits. Consequently, the father retained the beneficial interest for life.
• The Indenture therefore created a settlement within the meaning of the Settled Land Act, 1882 (the operative regime for pre-2009 transactions). The property was “settled property” for the purposes of the TCA CGT settlement provisions.
• National Bank v Keegan remains binding in Ireland (save insofar as displaced by the Land and Conveyancing Law Reform Act 2009 (LCLRA 2009) on a prospective basis). The Court declined to follow Northern Irish authority to the contrary.
• The 2006 sale structure—where the daughter conveyed and the father “released” his rights—did not change the substance that beneficial ownership lay with the father up to the release. The allocation of sale proceeds strongly corroborated that reality.
• The Court answered both stated questions affirmatively: the TAC erred in law in holding the property was not settled property and in holding that the daughter acquired the legal and beneficial interest in 1986.
• The case was listed for final orders, with the Court’s answers determining the legal framework for any CGT consequences (e.g., deemed disposals under s.576 TCA), but with computations remaining for subsequent orders.

Analysis

1) Precedents Cited and Their Influence

• National Bank Ltd v Keegan [1931] IR 344 (Supreme Court):

  Keegan recognized that an exclusive right of residence over a defined part of unregistered land can amount to an equitable life estate. Kennedy J treats Keegan as controlling Irish authority (pre-2009) and finds the facts here even stronger for an equitable life interest: the Indenture reserved not merely exclusive residence but also the rents and profits of the whole property to the transferor. Relying on Keegan, the Court concludes that a lifetime equitable interest was retained by the father, thereby creating settled property.

• Bank of Ireland v O’Donnell [2016] 2 ILRM 441 (Court of Appeal):

  O’Donnell addressed whether a general right of residence vested in the Official Assignee on bankruptcy. It held such a right was personal and non-assignable. Kennedy J distinguishes O’Donnell: the father’s rights in this case included the right to all rents and profits—rights with economic value and assignability—which would have vested in the Official Assignee if he had gone bankrupt. Thus, O’Donnell does not preclude recognition of an equitable interest here.

• Walker [1999] NIR 84 & Jones v Jones [2001] NIR 244 (Northern Ireland):

  These decisions emphasize that general or exclusive residence rights can operate as licences rather than life estates, and Walker suggests a life estate cannot be “carved out” by reservation absent words of grant. Kennedy J declines to adopt this approach where it conflicts with Keegan, which is binding in Ireland, and notes that the father’s reservations in O’Dwyer were qualitatively broader than the rights in Walker/Jones. The Court therefore finds them distinguishable and not authoritative in this jurisdiction for pre-2009 transactions.

• CIR v Plummer (1979) 54 TC 1 (House of Lords):

  Plummer informs the interpretive approach to the capacious statutory definition of “settlement” in tax codes. It introduces “bounty” as a necessary element guiding the scope of “settlement.” Kennedy J accepts that natural love and affection can satisfy this element, aligning with the Indenture’s consideration, and rejects an unduly narrow reading that would exclude instruments plainly intended to create beneficial succession.

• Raymond Hughes v Revenue Commissioners [2019] IEHC 807; Mara (Inspector of Taxes) v Hummingbird Ltd [1982] ILRM 421:

  These cases lay down the High Court’s function on a case stated: primary facts are respected unless unsupported by evidence; inferences from documents are reviewed on the basis that the Court is in as good a position as the Commissioner to interpret instruments. Kennedy J thus undertakes his own construction of the 1986 Indenture and the 2006 transaction mechanics.

• Commissioners for HMRC v Raymond Tooth [2021] UKSC 17:

  Cited for the proposition that documents (including tax returns) must be read as a whole and contextually. Kennedy J applies that orthodox approach to the Indenture: the fee simple words cannot be read in isolation from the sweeping life reservations of residence and income.

2) Legal Reasoning

The Court’s reasoning rests on careful document construction, orthodox equitable principles, and a purposive application of the pre-2009 settlements regime:

• Whole-document construction: Although the Indenture used fee simple language, the Court emphasized the equally forceful text “EXCEPTING AND RESERVING” to the father “full right of residence and occupation” and “the right to rents and profits” for his life. Read as a whole, the deed transferred legal title to the daughter while preserving for the father all substantive incidents of beneficial ownership during his lifetime.
• Beneficial ownership retained by the father: The daughter acquired only a reversionary interest and could not enjoy possession, occupation, rents, or profits until her father’s death (or surrender by him). This aligns with the classic pattern of successive enjoyment under a settlement: the father’s life interest followed by the daughter’s remainder.
• Settled Land Act, 1882 (pre-2009) applies: The Court rejects reliance on the LCLRA 2009; it does not retrospectively alter the legal character of 1986/2006 events, and the property was unregistered. The 1882 Act is “the operative provision for present purposes.”
• Keegan is binding; Walker/Jones not followed: Keegan confirms that an exclusive right of residence can amount to an equitable life estate. The father’s reservations here were stronger than in Keegan (they included all rents and profits), making the conclusion of a life interest more compelling. Northern Irish authorities to the contrary do not displace Keegan in Ireland.
• Economic reality and “follow the money”: The allocation of the 2006 sale proceeds—most of the net consideration going to the father, with the daughter receiving at most a modest sum—corroborated the parties’ understanding that the father was the beneficial owner pre-sale. The transaction structure (the father “releasing” rights rather than conveying) was a conveyancing choice that did not alter substantive rights.
• “Bounty” requirement satisfied (Plummer): The Indenture’s consideration of natural love and affection suffices to supply the element of “bounty,” reinforcing classification as a settlement for tax purposes.
• Trust character and TCA settlement code: The Court accepts the classic trust paradigm—separation of legal title (in the daughter) from enjoyment (in the father)—as present. That suffices for “settled property” for the purposes of the TCA settlement provisions. While not finally adjudicating computational consequences, the Court’s answers engage TCA ss. 575–577A in principle.

3) Statutory Framework and How the Court Applied It

• Settled Land Act, 1882: The deed created successively enjoyed interests: the father’s life interest (residence and income) and the daughter’s remainder (legal title with equitable enjoyment postponed). This brings the land within the pre-2009 concept of a settlement.
• Taxes Consolidation Act 1997, Part 19, Chapter 3:
  • s.575: A “gift in settlement” is a disposal of the entire property which becomes settled property—consistent with the 1986 Indenture given for natural love and affection.
  • s.576: When a person becomes absolutely entitled as against the trustee, the trustee is deemed to dispose and reacquire at market value. On the Court’s analysis, the father’s pre-sale surrender of his life interest is the type of event to which s.576 can, in principle, attach.
  • ss.577 and 577A: Definitions of “life interest” and reliefs on termination or relinquishment may be engaged. The Court noted rival arguments but did not find it necessary to resolve all subsections at this stage.
  • s.604(10): Principal private residence relief in trust contexts may have relevance to trustee computations if applicable; again, computations were not determined in this judgment.
• LCLRA 2009: Not applicable to these pre-2009 events; the Court declined to use it to recharacterize the 1986 conveyance or the nature of the father’s rights.

4) Impact and Implications

The decision will resonate across several domains—tax planning, property/trusts, and tax administration:

• Reaffirmation of Keegan and pre-2009 law: O’Dwyer confirms that, for pre-2009 instruments, the reservation of an exclusive right of residence coupled with the right to the rents and profits can create an equitable life interest and thus a settlement—even where the deed purports to convey the fee simple to another.
• Beneficial ownership is determined by substance, not labels: Legal title words (“fee simple”) will not prevail over substantive reservations of lifetime control and income. Courts will “follow the money” and the enjoyment of economic benefits to locate beneficial ownership.
• CGT on disposals of settled property: The Court’s holdings indicate that, in analogous cases, the trustee (or settlor retaining the life interest) may be the relevant taxpayer on deemed disposal events under s.576, potentially with reliefs (e.g., s.577A; s.604(10)) where conditions are met. The donee/remainderman may have no CGT on the immediate sale if acquisition and disposal values are equal by virtue of s.576 deeming. Computations remain fact-specific and were not finalized here.
• Estate planning and historic deeds: Many pre-2009 family conveyances used similar formulae to secure lifetime occupation and income for a parent. O’Dwyer provides a clear analytical template to assess whether those deeds created settlements for CGT purposes. It may prompt re-examination of past and pending disputes where Revenue assessed the legal owner rather than the trustee/life tenant.
• Conveyancing mechanics do not control tax outcomes: Whether a life tenant “releases” rights to the remainderman pre-sale or co-conveys to the purchaser is secondary; the substance of beneficial ownership up to the sale is what counts.
• Post-2009 landscape: The LCLRA 2009 reformed the law of real property and settlements. While O’Dwyer is about pre-2009 events, its reasoning cautions that labels alone will not control; one must examine the statutory regime applicable at the time and the substantive rights reserved or granted.
• Administrative practice: The judgment encourages closer examination of the flow of sale proceeds, the scope of reserved rights, and the practical enjoyment of property to determine beneficial ownership for CGT. It also underscores the centrality of documentary construction and context.

5) Practice-oriented “Key Principles” Emerging from O’Dwyer

• Where a pre-2009 deed transfers legal title but reserves to the transferor, for life, the full right of residence/occupation together with the entirety of rents and profits, a settlement is likely to be found.
• In such cases, the transferor typically retains the beneficial life interest; the transferee holds legal title and remainder.
• The mechanics of a subsequent sale (e.g., a pre-sale “release” by the life tenant) do not negate the prior existence of the life interest or the settlement.
• Economic reality and the allocation of consideration can corroborate beneficial ownership and should be examined contemporaneously.
• Keegan remains binding in Ireland for pre-2009 transactions; Northern Irish authorities to the contrary are not determinative.
• Plummer’s “bounty” criterion can be satisfied by natural love and affection in family settlements for CGT purposes.

Complex Concepts Simplified

• Legal vs. Beneficial Ownership: Legal ownership is whose name is on the title; beneficial ownership is who enjoys the property’s benefits (e.g., right to live in it, to receive rents). One person can hold legal title while another enjoys the benefits. A trust is the classic mechanism dividing these roles.
• Settlement / Settled Property: A settlement arranges for successive enjoyment of property (e.g., A for life, then to B). “Settled property” is property subject to that arrangement. Under the pre-2009 regime, a settlement can arise even without using the word “trust” if the instrument creates successive beneficial interests.
• Life Interest: The right to enjoy (e.g., occupy, receive income from) property during one’s lifetime. At death or upon surrender, the next interest (e.g., the remainder) takes effect.
• “Gift in Settlement” (s.575 TCA): A transfer of property into a settlement (even if the donor remains a beneficiary or trustee) is a disposal for CGT; the property becomes “settled property.”
• Deemed Disposal on Absolute Entitlement (s.576 TCA): When a person becomes absolutely entitled to settled property as against the trustee (e.g., when a life interest ends and the remainder falls into possession), the trustee is deemed to dispose of and reacquire the assets at market value. This is a timing point for CGT, potentially with reliefs.
• Principal Private Residence (PPR) Relief in Trust Contexts (s.604(10) TCA): PPR relief can apply to a trustee’s disposal where an individual entitled to occupy under the settlement has used it as their only or main residence, subject to the statutory conditions.
• Case Stated Appeal: The High Court answers questions of law based on facts found by the TAC. It may reinterpret documents itself but does not re-try facts unless unsupported by evidence.

Conclusion

O’Dwyer is a significant reaffirmation of the principle that, in pre-2009 Irish law, a deed that transfers legal title but reserves, for life, the full right of residence and occupation together with all rents and profits can create an equitable life interest in the transferor and thereby “settled property” for CGT purposes. The High Court’s approach is avowedly substantive: it reads documents as a whole, looks to the enjoyment of economic benefits, and follows the money to confirm where beneficial ownership lies.

The judgment clarifies that the presence of fee simple words does not preclude a settlement where lifetime benefits are comprehensively reserved; Keegan remains good law in Ireland (pre-2009), and Northern Irish authority to the contrary is not determinative. For CGT, the practical implication is that deemed disposal rules for settled property (s.576 TCA) and related reliefs may be the correct analytical framework—often making the trustee/life tenant, not the remainderman/legal title holder, the relevant taxpayer at the key CGT event.

In broader terms, O’Dwyer underscores a substance-over-form approach to beneficial ownership and provides a clear doctrinal roadmap for resolving similar disputes arising from family conveyances predating the LCLRA 2009. While final computational issues were left for orders, the legal rule laid down is clear: extensive lifetime reservations of residence and income by a transferor can and do create settled property for CGT purposes.

Case Details

• Court: High Court of Ireland
• Neutral Citation: [2025] IEHC 490
• Judge: Kennedy J
• Date: 20 October 2025
• Procedure: Appeal by Case Stated (TCA s.949AQ) from the Tax Appeals Commission
• Parties: Jacqueline O’Dwyer (Appellant) v The Revenue Commissioners (Respondent)