5
June 1997
Costello
J:
INTRODUCTION.
Mrs
Proes was born in Bandon, Co Cork in 1916 of Irish parents. As a young woman
she left this country and took up employment in England and there married an
Englishman in 1940. She became a British national and resided until her
husband's death outside Ireland (except for a short period in the war years).
When her husband died in 1982 she returned to live in Kinsale where she and her
husband had had a holiday home for many years. The question that arises in this
case is whether she has been domiciled in Ireland since that time for the
purposes of the Income Tax Acts.
Section 76(1) of the
Income Tax Act 1967
provides for payment of Income Tax on income arising from securities outside
the State but sub-section (2) provides that sub-section (1) is not to apply "to
any person who satisfies the Revenue Commissioners that he is not domiciled in
the State". Mrs Proes was assessed under sub-section (1) for the years 1982/83,
1983/84, 1984/85, 1985/86, 1986/87, 1987/88, 1988/89 and 1989/90. She appealed
these assessments and the Appeal Commissioners determined the appeal against
her on the 7 June 1991 and this determination was affirmed by the Circuit Court
judge in Cork on the 28 February 1994, the learned Circuit Court judge holding
that she was domiciled at all relevant times within the State. On her
application she has appealed to this court under sections 428 and 430 of the
1967 Act by way of case stated on the ground that his determination was
erroneous in point of law.
THE
FACTS.
The
evidence given by the appellant is summarised in the Case Stated as follows.
She
was born in 1916 in Bandon, County Cork to Irish domiciled parents. She lived
with her parents in Bandon where she was brought up and went to school until
the age of 15. At that point for reasons of her mother's health, she went with
her mother to stay with relatives in South Africa. She remained in South Africa
after her mother's return to Ireland and attended college there. At the end of
18 months she went to England where she took up training as a nurse in
Yorkshire and for a further year at Bournemouth.
In
1936 the Appellant took up employment with the company Shell International
Limited and moved to Teddington. While working for Shell she met Neville Proes
who also worked for that company and in 1940 they married. Mr Proes was a
British subject who was born in England where he had always lived and was
accordingly domiciled in England.
The
Appellant's husband served in the Royal Navy for the duration of the Second
World War. The ship in which he served was based in Derry and, largely for that
reason, the Appellant spent most of the war years with her parents at their
family home in Bandon, County Cork and staying with friends in Derry.
Following
the War, Mr Proes was posted in the course of his employment with Shell
International to various countries throughout the World for periods of varying
duration and on all of these postings Mr Proes and in due course, their two
daughters, travelled and lived with Mr Proes for the duration of each posting.
As
appears from the written summary of this history, the family lived in Egypt,
Japan, California, Texas, New York and Bermuda during the years indicated apart
from three separate periods when Mr Proes was again stationed in England.
The
Appellant and her husband had two children, both daughters, the eldest of whom
was born in Bandon in 1943 while the Appellant was living with her parents
during the War. The second daughter was also born at Band on because the
Appellant came to Ireland in order to have the assistance and support of her
own mother at the time of the birth and immediately afterwards because she had
tuberculosis and was reluctant to trust the hospital services in Egypt where
the family was based at the time.
The
only occasions when the Appellant and her husband acquired permanent family
homes of their own were during the two periods of 1949-51 and 1956-62 when Mr
Proes was working for Shell International in England. In the first of these
periods they purchased their first house at 15, The Crest, Surbiton, Surrey,
but this was then sold when Mr Proes was posted to Japan. Upon their return in
1956 they purchased a house at 106, Dover's Green Road, Reigate, Surrey and
again, this was purchased with a view to it being their permanent home. From
both of these houses the daughters attended school during the years in
question. The house in Reigate was then sold when Mr Proes was posted to
California. The Appellant and her husband did not buy a house in the UK between
1970 and 1982.
The
Appellant's husband ceased working for Shell International in 1970 and
thereafter worked as a consultant to other companies including Texas Eastern
Exploration Co in Houston, Texas, and later the Swedish shipping line Gottas
& Larsen in New York and then Bermuda.
During
the years 1980-1982, whilst living in the UK the Appellant and her husband
lived in an apartment at Ebury Mews in London provided for them by Mr Proes'
employer. In 1982 Mr Proes was taken ill and died unexpectedly at the age of
61. He had developed heart problems while in New York in 1979 and a subsequent
operation did not prove successful.
The
Appellant was allowed to remain in occupation of the apartment for
approximately six months following the death of her husband but was then
obliged to vacate it.
In
1970 the appellant and her husband had purchased a house called "The Brambles"
at Ardbrack, Kinsale, County Cork as a holiday home. Mr Proes was a keen
fisherman and they had intended to use the house as a holiday home on occasions
when Mr Proes was able to return on leave from his foreign postings. The
Appellant and her husband had not thought a lot about what they would do on his
retirement but would probably have stayed a lot of the time in Kinsale and also
intended to travel a lot, in fact, in the period from its purchase to the death
of Mr Proes, circumstances had prevented any extensive use being made of it.
But
they had returned to it for a period of recuperation after Mr Proes had
developed heart trouble in 1979.
When
she was obliged to vacate the apartment in London, the Appellant decided to
stay at the house in Kinsale because it was the only place immediately
available to her in which to live and put her furniture from the apartment and
also because she had been strongly encouraged by family and friends not to make
any permanent decision as to her future in the immediate period following her
husband's death. The Appellant's daughters had tried to persuade her to live in
London on several occasions but she was happy in Kinsale. She would probably
stay in Kinsale as long as her health permits.
Over
a period of time the Appellant said she found living in Kinsale quite agreeable
but until approximately 1991 when she became less able to travel as a result of
having broken her leg in a fall, the Appellant spent only part of every year at
Kinsale. The remainder of the year tended to be spent with either of her
daughters who are married with their own families in England and more
frequently travelling to stay with friends in Portugal, the United States of
America and elsewhere. In recent years her visits to London have diminished and
her family came to visit her in Kinsale quite often.
Since
1982, however, she had always envisaged that if she ceased to be able to look
after herself and live alone, she would return to England to live closer to her
daughters to whom she would have to look for support and assistance. While
there had been no immediate urgency during most of that period about finding
somewhere to live in England, she and her son-in-law, Mr Jackson, on her
behalf, made various enquiries with estate agents and had visited several
houses with a view to making a purchase but none of these houses suited her.
The appellant had viewed about four houses in four years. In mid-1992 she
finally purchased a house at 47, Quilter Street in London with the object of
having it available to her as a residence. To date, she has not actually
resided in the house. She purchased it as a very old house which required
extensive refurbishment and builders have been carrying out the necessary works
on her behalf since early 1993.
The
Appellant gave evidence that she was a British subject and held a British
passport. Having been born in Ireland in 1916 she became entitled under the
provision of the British Nationality Act, 1948 to elect to remain a British
subject, she had given notice to the Home Office for the purpose as confirmed
by the above letter of 19 January 1951. She regarded all of her affairs as
being based in England and looked after for her thereby accountants, solicitors
and a stockbroker. She is in receipt of an old age pension from the Department
of Social Security on the United Kingdom. Apart from a current account which
she maintained at Allied Irish Banks for routine household expenses, her main
accounts and investments are all maintained with institutions outside Ireland.
She has health insurance in Ireland through the VHI and also has private health
insurance in the UK.
Both
her daughters are married to English nationals and are domiciled in England, as
are her grandchildren. One of her reasons for keeping on the home in Kinsale
and living there is the fact that her and grandchildren very much enjoyed
visiting Kinsale and spending extensive holiday periods there each year. The
house in Kinsale is regarded by the families as a holiday home.
Finally,
in reply to a question posed by the Circuit Court judge at the conclusion of
her evidence as to whether the appellant now considered the Kinsale house as
her permanent home the Appellant replied "yes, for the time being".
Determination.
No
other evidence was adduced before the learned trial judge and his determination
of the appeal before him was as follows;
"Having
considered the evidence adduced and the submission made on behalf of the
parties, I gave judgment in favour of the Respondents. I found that, on the
evidence of the Appellant which was entirely credible in my view and given
quite candidly, there was no doubt that the Appellant has a domicile in England
from the date of her marriage until 1982. There was no question of either the
Appellant or her husband having acquired a domicile in this Country by purchase
of the house in Kinsale as this was purely a holiday home and was not intended
as anything other than a holiday home up to the death of the Appellant's
husband in 1982. However, the Appellant has resided in Kinsale for a period of
over ten years. I was satisfied that she did intend to return to England at
some future time and if the house she has already acquired in London does not
turn out to be suitable she would probably acquire some alternative residence.
I considered that the issue which arose upon the appeal was whether or not,
despite the Appellant's evidence as to her intentions for the future (which I
accepted) her acts belied her intention sufficiently to establish that she
nevertheless intended to live indefinitely in Cork. No doubt if her two
daughters had married Irishmen the position would have been easier to resolve
because she would clearly have envisaged remaining permanently in this
jurisdiction to be near them. But her daughters are clearly permanently
resident in England. On balance, it seemed to me that the length of residence
in Cork seemed difficult to ignore and I accordingly determined that the
Appellant has made a domicile of choice in this jurisdiction.
THE
QUESTION.
As
formulated in the Case Stated the question of law for the opinion of this court
is as follows;
"Having
regard to the evidence given and the facts found by me as aforesaid and having
regard to the submissions of law which were made thereon was I correct in law
in determining that the appellant had acquired a domicile of choice in the
State by residing in Kinsale since 1982".
THE
LAW.
(1)
Every person receives at birth a domicile of origin, but he or she may acquire
a domicile of choice by the combination of residence and intention of permanent
or indefinite residence. In addition there was a common law rule that a wife
acquires a domicile of dependency on marriage but it has now been decided (W v
W [1993] 2 IR 476) that this common law rule ceased to be part of Irish law by
virtue of Article 50 of the Constitution, being inconsistent with Article 40(1)
and that it did not survive the enactment of the Constitution. In this case the
plaintiff does not claim that she obtained a domicile of dependency in England,
but asserts that she obtained a domicile of choice in England, at latest in
1940.
(2)
A domicile of choice may be lost by abandonment. This will occur when a person
ceases to reside in the country of domicile and also ceases to have an
intention to return to it as his/her permanent home (see Undy v Undy (1869)
LRISc and Div 441; McMahon and Binchy, "Conflict of Laws" p 72 and Halsbury's
"Laws of England" 4 Ed Vol 8 para 689). When a domicile of choice is abandoned
either (i) a new domicile of choice is acquired or (ii) the domicile of origin
revives (see Dicey and Morris "Conflict of Laws" 12 Ed p 144).
(3)
Subsection (2) of
section 76 of the
Income Tax Act 1967 clearly imposes the
burden of proof on Mrs Proes to establish (a) that she acquired a domicile of
choice in England in 1940 and (b) that she did not abandon her domicile of
choice at the time she returned to Kinsale after the death of her husband or
any time subsequently (see Prior-Wandesforde v The Revenue Commissioners I ITR
248, 253). Her counsel accepts that the onus was on her to prove that she had
acquired a domicile of choice but submit that having discharged that onus there
is no burden cast on her to establish that it was abandoned. I cannot agree. It
seems to me that the section imposes on her the burden of proving that she was
not domiciled in Ireland and on the facts of this case require her to establish
that she did not abandon her English domicile.
(4)
When the High Court is considering a case stated seeking its opinion as to
whether a particular option was correct in law it should apply the following
principles. (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 the
judge's conclusions are not based on a mistaken view of the law, they should
not be set aside unless the inferences which drew were ones which no reasonable
judge could draw. (5) Whilst some evidence will point to one conclusion and
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, 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 (see O'Culachain v
McMullen Brothers Ltd [1995] 2 ILRM 498 and Mara v Hummingbird Ltd 1982 ILRM
421).
CONCLUSIONS.
The
case stated shows that the learned trial judge considered that he was required
to decide whether Mrs Proes, having acquired a domicile of choice in England,
had acquired a new domicile of choice in this country by taking up residence in
Kinsale in 1982. He concluded that she had and the question he then asked this
court to answer was whether he was correct in determining that she had acquired
a domicile of choice in the State by residing in Kinsale since 1982. With
respect, I think he erred in the question he thought he was required to answer
and the one which he posed for determination by this court. When a person who
has acquired a domicile of choice in England returns to Ireland (his/her
domicile of origin) the question is not whether a new domicile of choice has
been acquired in this country but whether the English domicile of choice had
been abandoned. If it had, then the Irish domicile of origin revives. This
means that the question which should have been posed was; "Did Mrs Prose
abandon her English domicile by (a) residing in Cork and (b) deciding not to
return to live permanently in England"?, and not; "Did not Mrs Prose decide to
live permanently in Ireland and thereby acquire a new domicile of choice"? The
defendants say that this is a distinction without a difference and that the
decision of the Circuit Court judge that Mrs Prose had decided "to live
indefinitely" in this country and thereby acquired a new domicile of choice
means that she had ceased to intend to return to live permanently in England
and therefore had abandoned her English domicile.
I
cannot agree with the defendants submissions. I think the learned trial judge
applied a wrong view of the law and this led him to draw the wrong inferences
from the evidence and caused him to fail to reach the conclusion which he was
required by the law to reach. My reasons are as follows.
(a)
The learned trial judge stated that the issue which arose on the appeal was
"whether or not, despite the appellant's evidence as to her intentions for the
future (which I accepted) her acts belied her intentions sufficiently to
establish that she nevertheless intended to live indefinitely in Cork". I do
not think, with respect, that the learned trial judge correctly identified the
issue which arose in the case. Rather the issue was whether, in the light of
all the evidence, it could be inferred that Mrs Proes had abandoned her English
domicile, not only by ceasing to reside in England but by residing in Ireland
and in ceasing to have an intention to return to England as her permanent home.
The failure to address this issue meant that proper weight was not given to the
very compelling evidence that no intention to abandon her English domicile
could properly be inferred from the admitted facts.
(b)
It will be recalled that Mrs Proes came to live in Kinsale in 1982 after her
husband's death because she had nowhere else to live at that time, having been
obliged to leave her London flat which had been provided by her husband's
employers. She was then advised by her family that she should not make any
permanent arrangement as to her future in the immediate period following her
husband's death and so it is clear that in 1982 she had not decided to cease
residing permanently in England.
From
1982 (when she was 64 years of age) she envisaged that if she ceased to be able
to look after herself she would return to live in England to live closer to her
two married daughters who were living in London and to whom she would look for
support and assistance. She looked out for a suitable residence, making
enquiries from house agents and visiting several houses in London (4 over a
period of four years) with a view to purchasing a residence in which to live.
Finally she purchased a house in mid-1992 with a view to having it available as
her residence. From 1993 to time the appeal was heard in 1994 builders had been
carrying out extensive refurbishment to her house. Had the proper test been
applied by the learned trial judge that the inferences which would inescapably
arise from all the evidence, including the facts which I have just summarised,
is that Mrs Proes never ceased to have an intention to return to reside
permanently in England.
(c)
Furthermore, the issue that arises in this case required the court to reach a
conclusion as to when Mrs Proes had abandoned her domicile of choice, her
decision to reside in Kinsale not in itself amounting to an abandonment of her
English domicile. The Revenue Commissioners had claimed that her Irish domicile
had revived in 1982, a contention which could only be correct if in that year
she had ceased to have an intention of returning to live permanently in
England, a contention which is not supported by the evidence. Because of the
test he applied the learned trial judge did not address this aspect of the case
and in so far as his determination implicitly accepted the Revenues contention
(by agreeing that she was assessable from 1982 onwards) this was not consistent
with his view that the length of Mrs Proes residence from 1982 was the decisive
factor which belied her stated intention to return to England.
In
the light of all the evidence I do not think that her intention to return to
reside in London was so vague and indefinite as to justify the conclusion that
her domicile of choice had in reality been abandoned (as was the case in In re
Furse (1980) 3 All ER 838, an authority on which the respondents relied, in
which the court considered evidence as to the acquisition of a domicile of
choice) not its abandonment. She continued actively to search for a suitable
residence in London and she eventually purchased and refurbished a residence
for herself -- facts which raise in a compelling fashion an inference that she
had never abandoned her intention to return to reside permanently in London
when she felt it was appropriate for her to do so.
I
must conclude, therefore, that the learned trial judge erred in the principles
of law he applied and in the inferences of fact he drew. I propose to answer
the question raised as follows.
"The
learned trial judge was incorrect in law in determining that the appellant had
acquired a domicile of choice in the State; She had acquired an English
domicile of choice which she had not abandoned and accordingly at the relevant
times her Irish domicile of origin had not revived".
