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1. The Applicant has, since the coming into effect of the act, acted as a "sole wholesale distributor" within the meaning of section 133(2)(a) of the 1992 Act and has, in accordance with its obligations pursuant to the Act, made declarations to the Revenue Commissioners in the prescribed manner as to the open market selling price (OMSP) of, inter alia, the Volkswagen Passat vehicle, the value of which is in issue in these proceedings.

2. The basic dispute between the parties arises from the fact that the Respondents are of opinion that the open market selling price at which the Volkswagen Passat is offered for sale is greater than the price declared by the Applicant. In those circumstances, the Revenue Commissioners contend that they have power to make a determination pursuant to section 133(2)(c) of the 1992 Act as to the open market selling price of the vehicle.

3. By way of background legislative history, chapter IV of part II of the Finance Act, 1992 introduced a new regime requiring the registration by the Revenue Commissioners of all motor vehicles in the State. Section 131(1)(a) of the 1992 Act required the Revenue Commissioners to "establish and maintain a register of all vehicles in the State". The entry of vehicles on the register is mandatory. By virtue of section 131, it is an offence for any person after the 1st January, 1993 to have in his possession an unregistered vehicle unless he is a motor dealer or some other "authorised person" within the meaning of section 136 of the 1992 Act, or unless he falls within one of the other statutory exceptions.

4. On the 28th May, 1999, the Applicant made a declaration pursuant to section 133(2)(a) of the 1992 Act. In that declaration, the Applicant stated that in its opinion, the open market selling price of the Volkswagen Passat 1.6L petrol motor car as from 22nd June, 1999 was £16,110. This equated to 90% of the Applicant's recommended retail selling price (RRSP) which was listed at £17,900.

5. During 1998, it appears that the Revenue Commissioners had initiated a nationwide survey of the retail prices at which certain models of vehicles were being sold on the open market in the State. In March, 1999 the survey was extended to the Volkswagen Passat 1.6L petrol vehicle. Authorised officers of the Revenue Commissioners visited 46 motor dealers during the period from March to June, 1999 where they examined sales records for the period from February to April, 1999 and extracted details of 214 retail sales on the open market. Transactions involving sales between dealers or export sales (neither of which involve the payment of Vehicle Registration Tax) were excluded for the purpose of this exercise. Similarly, transactions which were not open retail market sales (such as those involving special fleet discounts) were excluded.

6. During the period from February to April, 1999, a total of 298 Volkswagen Passat 1.6L petrol vehicles were registered. The Revenue Commissioners were of opinion that the 214 transactions considered by them were sufficiently representative to allow them to form a reasonable opinion of the open market selling price (that is to say the price at which the Volkswagen Passat 1.6L petrol motor vehicle might reasonably be expected to fetch on an arms length sale on the open market).

7. As far as the Revenue Commissioners were concerned, the survey indicated that, on average, the OMSP of the Volkswagen Passat 1.6L petrol vehicle was 93% of the Applicant's RRSP in force with effect from 1st January, 1999. The recommended retail selling price at that time was £17,765 while the open market selling price declared by the Applicant was £15,998. However, the findings of the survey indicated that, on average, the open market selling price was £16,520.

8. In the Respondent's written submission, it is stated that the Respondents were "very surprised" when, in May, 1999 the Applicant submitted a new declaration which signalled an increase recommended retail selling price of £17,900 but purported to declare an open market selling price of no more than £16,110 (being 90% of the RRSP).

9. By letter dated 19th July, 1999, Mr. John O'Leary, Assistant Principal in the Respondents' office, wrote to the Applicant drawing attention to the survey which the Respondents had undertaken. The letter made clear that the survey suggested that, on average, the retail price of such vehicles (i.e. Volkswagen Passat 1.6L) was marginally above 93% of the recommended retail selling price and that this did not reconcile with the declared OMSP which was set at only 90% of the RRSP. Mr. O'Leary therefore suggested that unless the Applicant was in a position to dispute the findings of the survey or to show that some of the relevant market conditions no longer applied, a revised declaration should be submitted by the Applicant.

10. The Applicant refused to submit a revised declaration and contended that it had complied with the legislation.

11. Following some further correspondence, Mr. O'Leary wrote on the 3rd September, 1999 stating:-

12. By letter dated 16th September, 1999 the Applicant contested the Respondents entitlement to adjust the open market selling price. The letter contended that the Revenue Commissioners had no such right under section 133(2)(c) of the 1992 Act. The letter concluded by indicating that the Applicant believed the Revenue Commissioners had been provided with a "clear analysis of the error inherent" in their approach and that they would use all legal means at their disposal to prevent the Revenue Commissioners from making any adjustment to the declared open market selling price. The letter concluded:-

13. In a letter dated 29th October, 1999, Mr. O'Leary replied as follows:-

14. Within a few days of receipt of this letter, the Applicant sought and was granted leave to bring Judicial Review proceedings by order dated 5th November, 1999. In these proceedings, the Applicant seeks an order of Certiorari to quash the purported determination by the Revenue Commissioners. The grounds set out in November, 1999 were extended in February, 2000.

15. Rather than laboriously reciting these amended grounds and/or the Statement of Opposition, it is perhaps more useful to focus upon the three points to which this case has effectively resolved itself, and which were stated by Mr. Gallagher S.C. on behalf of the Applicant to be as follows:-

16. Mr. Gallagher for the Applicant contends that the correspondence makes it clear that it was Mr. O’Leary, the Assistant Principal, who purported to form the opinion that the Open Market Selling Price was higher than the price declared for the vehicle and it was Mr. O’Leary who purported to determine the appropriate Open Market Selling Price. Mr. O’Leary had attempted to avoid the plain meaning of his letters and the reality of what he did by contending in paragraph 19 of his Affidavit (sworn 26th day of November, 1999):-

17. However, earlier in the same Affidavit, Mr. O’Leary makes it clear that it was he who questioned the Applicants declaration and intimated that it was the Respondents intention to invoke its power under Section 133(2)(c). Mr. Gallagher argued that the Section is clear and compels the Respondents to form the opinion. The provision does not authorise Mr. O’Leary or anybody other than the Commissioners to form that opinion. Furthermore, Section 849(6) of the Taxes Consolidation Act, 1997 provides:-

18. In the instant case, the particular powers were required to be exercised by the Revenue Commissioners. They were not so exercised and accordingly the Respondent has acted ultra vires .

19. He cited from Wade and Forsyth (8th Ed) (Oxford University Press) “Administrative Law” at p.316:-

20. He also referred to the following passage at p.316:-

21. He further referred to the following passage at p.318:-

22. He also referred to the decision of Murphy J. in O’Neill-v-Beaumont Hospital [1990] ILRM at 424 where he stated:-

23. In reply Mr. Fitzsimon’s for the Respondents simply states that the Respondents did not make any determination in this case. They ‘proposed’ to make a determination but were restrained by injunction from doing so. The attack mounted by the Applicant can only be made after the statutory power has being duly exercised. That never occurred in this case.

24. In relation to the second point, Mr. Gallagher asserted that the Applicants obligation is not to declare a price which is the highest price or even the average price. Once the price is a price which in the Applicants opinion was one which might reasonably be expected to be fetched on a first arms link sale on the open market, then that price “shall be deemed to be the open market selling price for each new vehicle of that model and specification.”

25. He contended that quite apart from the issues raised by the Applicant concerning the accuracy or reliability of the survey carried out by Mr. O’Leary, the results of that survey, even if they were to be accepted, do not establish that the price declared by the Applicant was not one which in his opinion the vehicle “might reasonably be expected to fetch on a first arms length sale thereof in the open market in the State by retail”. On the contrary, the survey revealed that 68 units or 32% of the sample were sold at or below the price declared by the Applicant at the time of the survey. At the time the survey was carried out, the recommended retail price was £17,765 and the price declared by the Applicant was 90% of this, namely £15,988. The survey reveals that there was a spread of actual prices ranging from £14,716 to £18,165. The highest price found was 23% above the lowest.

26. Further, he argues there is nothing in the legislation which permits Mr. O’Leary to substitute a new criterion of “averaging” the selling price for the criterion set forth in Section 133(2)(c).

27. Essentially Mr. Gallagher’s argument under this limb is that if a price declared can be regarded as reasonable, then, for the purposes of this Section, it is reasonable. In this case it was not off the spectrum. He further pointed out that the Applicants have no power over dealers to compel production of information or sales figures. Further, retail sales figures can be very misleading because extras can be added in and widely differing prices can be negotiated between different dealers and customers.

28. He further complained that his clients had no opportunity to challenge the survey to point out the very many variables which can exist as was suggested by the Affidavits sworn on behalf of the Applicant.

29. Mr. Fitzsimon’s argued that what Mr. O’Higgins did was in effect to make a declaration solely by reference to 90% of the (RRSP), an exercise which he contended was plainly unreasonable, ignoring as it did the realities of the marketplace. He further argued that it was not reasonable to make no enquiries or to seek no information when forming an opinion. The Applicant, he argued, had not provided a single document to provide any basis for the estimate arrived at, nor had any information been placed before the Court to challenge the accuracy of the survey carried out by the Respondents. And there is no claim made by the Applicant that the process of averaging the figures contained in the survey was irrational in any way.

30. On the third point, Mr. Gallagher submitted that what Mr. O’Leary had done in the instant case was to form an opinion as to the average price of a vehicle of the same model and specification at a time prior to the making of the declaration. In so doing, Mr. O’Leary failed to comply with Section 133(2)(c). In particular, he did not form any opinion as to the open market selling price of a vehicle “of a similar type and character” and his opinion was based on selling prices prior to the time of declaration and not on selling prices “at the time” of the declaration.

31. While the second part of this point was not argued to any degree, Mr. Gallagher forcefully submitted that the words “of a similar type and character” must mean vehicles which, though similar, are a different model and specification. He referred the Court to Collins English Dictionary (3rd Ed) (p.1441) for a definition of “similar” as being:-

32. He further argued that if Section 133(2)(c) existed to allow the Respondents deal with precisely the same matters being dealt with by the Applicant, it would produce the absurd situation that the Revenue would retain a power of intervention even if the Applicant had fully discharged its statutory obligations under Section 2(a). It followed therefore that Section 133(2)(c) must relate to some other basis for intervention, and the ordinary sense of the words clearly conveyed that the opportunity afforded to the Respondent to intervene lay in respect of vehicles “of a similar type and character.” If any other construction were placed on the words, there would be little or no point in dealers carrying out an estimation exercise which would be a complete waste of time.

33. Mr. Ftizsimon’s referred to the three basic rules of statutory interpretation outlined by Henchy J. in Inspector of Taxes-v-Kiernan [1981] IR 117.

34. These principles are set out at p.121 as follows:-

35. At p.122 he continued:-

36. Mr. Fitzsimon’s contended that these rules of statutory interpretation supported his position. The words “of a similar type and character” should reasonably be regarded as including “the same vehicle” because slight modifications could be made to a vehicle, such as the provision of leopard skin upholstery which might justify describing the vehicle as being “of a similar type and character”, but that did not mean that the same vehicle was not always involved.

37. Finally, Mr. Gallagher argued in the context of this third point that, as an aid to construction, the Court should consider Section 101 of the Finance Act, 2000 which effected an amendment to Section 133 of the Finance Act, 1992 to substitute the following paragraph for paragraph Section 133(2)(c):-

38. Mr. Fitzsimon’s for his part argued that the Court should have no regard to any subsequent amendment.

39. In relation to the delegation point, it seems to me that if Mr. O’Leary in substance made the decision himself, leaving only a formality to the Respondents, it must follow that the discretion which the legislation vests in the Respondents was in fact exercised by Mr. O’Leary. Mr. Fitzsimons has argued that the letter written by Mr. O’Leary dated 29th October, 1999 should be construed as merely indicating what the Respondents “proposed” to do, rather than being evidence of a decision already made.

40. However, it seems to me that all the characteristics of a decision, in the ordinary sense of the word, are contained within this letter. The letter indicates the revised (OMSP) of £16,520. The letter indicates the date with effect from which the revised (OMSP) shall have effect. This letter, it seems to me, can only be construed as explaining the consequences of a decision already or thereby made. If anything was being left over to the Respondents, it was merely a formality. Furthermore, Mr. O’Leary did not qualify the letter by stating that he would be making a recommendation to the Respondents, or that he would revert to Mr. O’Higgins to confirm the making of a decision and the date upon which it would be made or had been made by the Respondents. It was, for all practical purposes, a letter which conveyed to the recipient that the process was “done and dusted”.

41. That purported decision was clearly ultra vires and must be quashed for that reason.

42. However, if I am incorrect in this view, I should express my views on the remaining points.

43. Firstly, I do not accept Mr. Gallagher’s contention that once the Applicants complied with their obligations under Section 133(2)(a) that the matter was therefore at an end. The power of the Revenue to intervene if they feel a price declared is too high or too low is it seems to me, a separate and independent power conferred on the Respondents regardless of Section 133(2)(a).

44. While the person fixed with statutory liability to make a declaration may not fall in to the area of “being off the spectrum” or “irrationality” by being able to show that a significant percentage of sales (as in the instant case) were made at a price lower than that declared, the Respondents might well nonetheless feel that the margin of appreciation extended under the legislation to the wholesaler was being exercised in a manner which the Respondent regarded as less than satisfactory. It would seem unacceptable that the Respondents could be bound in every case by declarations which were 3% - 4% below what was ascertained to be the actual general position in the market place based on analysis of actual sales.

45. This brings me to the third point in respect of which I feel obliged to state that the principles enunciated by Henchy J. in I.T.-v-Kiernan, far from supporting the Respondents case, point strongly towards an interpretation which favours the Applicant. While this Section may be addressed to the motor trade, there is no sense in which the words can be deemed to have either a narrowed or an extended connotation on that account. There is certainly no evidence to suggest that any forced construction is appropriate.

46. Secondly, as the words appear in a statute creating a taxation liability, Section 133(2)(c) must be strictly construed, a fact which again favours an interpretation along the lines argued for by Mr. Gallagher. Finally, to the extent that I am required to draw on my own experience of the use of the word “similar”, I would favour the interpretation which is contained in the definition contained in the Collins Dictionary.

47. It is also quite clear that to construe the words as meaning “a different model of vehicle” is quite a legitimate way of looking at the subsection, given that the Respondent may be of the view that in conducting any such exercise that other makes or models of vehicles with similar characteristics may provide a basis for contrast or comparison with any declaration made. In other words, the subsection lends itself to an alternative functional interpretation without any straining or forced construction of language.

48. Given that I can reach a decision in favour of the Applicant for these reasons on the third of Mr. Gallagher’s points, I refrain from expressing any view as to whether a subsequent statutory amendment, even one as focussed as S.101 of the Finance Act, 2000, is available as an aid to construction.

49. Accordingly, I would hold in favour of the Applicant on two of the three grounds argued.