Howley v McMahon (Approved)

Factual and Procedural Background

This opinion addresses an application to amend a summary summons in a tax dispute between the Plaintiff and the Defendant. The Plaintiff, acting on behalf of the Collector General of the Revenue Commissioners, claims unpaid income tax for the years 2012, 2013, and 2014. The original summons incorrectly referred to the 2012 tax liability as arising from a tax "return" rather than a tax "assessment." The Plaintiff seeks to amend the summons to correct this clerical error. The Defendant has been represented by solicitors who now seek to come off record due to insufficient instructions from the Defendant, who has not appeared in court for the hearing. The Defendant’s daughter, who is not a party to the proceedings, has been involved in managing the Defendant’s tax affairs and has made submissions on his behalf, which the Plaintiff objects to.

The procedural history includes the issuance of the summary summons in January 2019, service outside the jurisdiction in May 2019, and a series of motions including a motion for judgment and prior amendments to the summons concerning the years 2013 and 2014, which were granted with the Defendant’s consent. The current motion to amend concerns the year 2012 and was issued in January 2024. The Defendant has not filed any affidavit opposing the motion since its service nearly nine months ago. The court previously part-heard the motion and adjourned it to allow the Plaintiff to explain the clerical error prompting the amendment. The Plaintiff has provided detailed affidavits explaining the error and the audit process that led to the notice of assessment for 2012.

Legal Issues Presented

1. Whether the court should grant the Plaintiff leave to amend the summary summons to replace the reference to a 2012 tax "return" with a tax "assessment" and to insert a statement regarding the notice of assessment sent to the Defendant.
2. Whether the Defendant would suffer any prejudice if the amendment were permitted, including the impact on any right of appeal against the tax assessment.
3. Whether the court should grant an adjournment of the hearing due to the Defendant’s solicitors seeking to come off record.

Arguments of the Parties

Defendant's Arguments

• The Defendant’s solicitors sought an adjournment on the basis that they wished to come off record because the Defendant’s instructions were insufficient to provide a reasonable service and certain documents were outstanding.
• The Defendant’s counsel submitted that permitting the amendment would prejudice the Defendant by preventing an appeal against the assessment.
• The Defendant’s daughter, who manages his tax affairs, submitted that the Defendant was ill and had made the required tax returns for 2013 and 2014.

Plaintiff's Arguments

• The Plaintiff asserted that the amendment was necessary to correct a clerical error and accurately reflect the basis of the 2012 tax liability, which arose from a notice of assessment following an audit.
• The Plaintiff argued there was no prejudice to the Defendant because the Defendant had not appealed the assessments within the statutory time limits, nor paid the assessed tax, which is a prerequisite for any very late appeal.
• The Plaintiff submitted that the Defendant had been on notice of the application for a long period and had not filed any affidavit opposing the amendment.
• The Plaintiff opposed the adjournment, noting that the Defendant’s solicitors had been on record and the Defendant had been aware of the hearing date, and that an adjournment would waste scarce court resources.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Croke v Waterford Crystal Limited [2004] IESC 97	Permitting amendments to pleadings when a clear and cogent explanation for the mistake is provided, especially when no undue delay or prejudice arises.	The court relied on this precedent to support permitting the amendment due to the detailed explanation of the clerical error and absence of undue delay or prejudice.
Woori Bank v KDB Ireland Limited [2006] IEHC 156	Amendments should generally be permitted unless it is manifest that the issue raised must necessarily fail.	The court applied this principle to find that the amendment did not introduce new claims or amounts and was not manifestly bound to fail.
Gladney v Grehan [2016] IEHC 561	Discussing conditions and timing for appeals against tax assessments, including the possibility of very late appeals subject to strict conditions.	The court considered this authority in addressing the Defendant’s submission about prejudice related to appeals and found no evidential basis for such prejudice.

Court's Reasoning and Analysis

The court carefully considered the nature of the amendment sought, which was to correct a clerical error by substituting "assessment" for "return" in respect of the 2012 tax liability and adding a statement regarding the notice of assessment sent to the Defendant. It emphasized that the amendment did not alter the amount claimed or introduce a new claim, but merely corrected the legal basis of the claim.

The court noted that the Defendant had been aware of the application for many months, had solicitors on record, and had not filed any affidavit opposing the amendment or asserting prejudice. The court found that the Defendant’s failure to pay the assessed tax undermined any argument that he could be prejudiced by the amendment in relation to appeal rights, as payment is a prerequisite for a very late appeal. The court also observed that the Defendant had previously consented to similar amendments for 2013 and 2014.

The court rejected the request for an adjournment, highlighting the waste of limited court resources and the Defendant’s failure to provide sufficient instructions to his solicitors. It stressed the court’s jurisdiction to manage its own business and allocate scarce resources efficiently.

In exercising its discretion under Order 28 rule 1 of the Rules of the Superior Courts, the court concluded that permitting the amendment was necessary in the interests of justice to enable the real issues in dispute to be determined at trial. The court reaffirmed that no decision was made on the merits of the underlying tax dispute at this stage.

Holding and Implications

The court REFUSED the application to adjourn and GRANTED the Plaintiff leave to amend the summary summons to substitute the word "return" with "assessment" in relation to the 2012 tax liability and to insert a statement regarding the notice of assessment sent to the Defendant.

The Defendant was given liberty to file a replying affidavit by 24 January 2025. The Plaintiff was ordered to serve the amended summary summons on the Defendant’s solicitors within seven days and was granted liberty to serve the Defendant directly by post and email.

Regarding costs, although the Defendant sought costs or costs up to the date of the hearing, the court held that the Defendant had been unsuccessful and that the general rule that costs follow the event applied. However, since the Plaintiff did not seek an order for costs, no costs order was made.

The decision has the direct effect of allowing the Plaintiff to proceed with the corrected claim form without delay and without adjournment, ensuring efficient use of court resources. No new legal precedent was established beyond the application of established principles concerning amendments to pleadings and court management.