High Court holds property is settled property under 1882 Act due to father's retained life interest in 1986 indenture.

THE HIGH COURT

[2025] IEHC 490

Record No. 2021/6R

IN THE MATTER OF A CASE STATED PURSUANT TO SECTION 949AQ

THE TCA 1997

BETWEEN

JACQUELINE O’DWYER

APPELLANT

AND

THE REVENUE COMMISSIONERS

RESPONDENT

JUDGMENT of Mr Liam Justice Kennedy delivered on 20 October 2025.

Introduction

1. This appeal by case stated under s.949AQ of the Taxes Consolidation Act (“TCA”) 19971, as amended, from the Tax Appeal Commission’s determination (“the Determination”) dated 1 December 2020 concerns a Capital Gains Tax (“CGT”) assessment raised by the Revenue Commissioners in the sum of €431,230.60. The Determination substantially upheld All statutory references below are to the TCA save as otherwise noted.

the assessment. The appeal concerns the beneficial ownership of a property (“the Property”) as of 23 November 2006. That issue largely turns on the meaning and effect of a 1986 indenture of conveyance (“the Indenture”) to the Appellant from her father, Patrick O'Dwyer. If it rendered her the beneficial owner, it follows that she is liable to CGT on its sale in 2006 for €4,500,000. The complication arises because, while the Indenture purported to transfer the fee simple to the appellant, it excepted and reserved unto Mr O’Dwyer the full right of residence in and occupation of the property during his lifetime, together with the right to rents and profits.

2. The Respondent says, and the Commissioner concluded, that, notwithstanding the lifetime reservation of rights, the Indenture rendered the Appellant the legal and beneficial owner of the property and thus liable for CGT on its 2006 disposal. The Appellant says that it transferred legal ownership to her, but subject to her father’s lifetime beneficial interest, constituting a “settlement” for CGT purposes. She says that she was not the beneficial owner at the time of disposal and was thus not liable for CGT on the transaction.

The Commissioner’s Material Findings of Fact

3. The Commissioner found the following material facts:-

a. The death of the Appellant’s mother in September 1984 and Mr O’Dwyer’s intention to remarry prompted Mr O’Dwyer to provide for her. The Indenture, made on 1 October 1986 between the Appellant (as Grantee) and Mr O’Dwyer (as Grantor), transferred the Property to the Appellant. b. The relevant extracts of the Indenture are as follows: "This INDENTURE … between PATRICK O’DWYER of 6/8 Quay Street in the City of Galway, Accountant, (hereinafter called the Grantor) … and JACQUELINE O'DWYER of 6/8 Quay Street in the City of Galway, Accountant and lawful daughter of the Grantor (hereinafter called the grantee), …, WHEREAS… The Grantor in consideration of natural love and affection … for the Grantee has agreed to convey the said property … to the Grantee in fee simple free from incumbrances save as hereafter appears.

NOW THIS DEED WITNESSETH that in consideration of the natural love and affection which the Grantor bears for the Grantee, the Grantor, as beneficial owner DOTH HEREBY GRANT AND CONVEY UNTO the Grantee ALL THAT AND THOSE the hereditaments and premises described in the First and Second Schedules hereto TO HAVE AND TO HOLD the same UNTO and to the use of the Grantee her heirs and assigns in Fee Simple EXCEPTING AND RESERVING UNTO the Grantor during his lifetime full right of residence in and occupation of, together with the right to rents and profits in and of the said property …" (emphasis added) c. On 25 August 1991 the Appellant granted a full and general irrevocable power of attorney to Mr O’Dwyer. d. The contract for sale of the Property dated 23 November 2006 named Mr O’Dwyer and the Appellant as the vendors. The recorded price was €4,500,000. e. Special Conditions 7 & 8 provided as follows: "...Patrick J. O'Dwyer joins these presents and in any Deed of Subsale or Collateral Mortgage for the purpose of agreeing to release his right of residence and his reservation of the aforesaid rents and profits". f. On 4 December 2006 the vendors’ solicitor submitted a Form CG5O to the Respondent which identified the Appellant and Mr O’Dwyer as the vendors. The solicitor’s covering letter said that: "Patrick J. O'Dwyer is not strictly speaking a disponer as he joins the contract for the purpose of conformity with it as he held certain rights over the property which he requires to release for the purpose of finalising the sale. We have included him in the CG5O because the contract describes him as a ‘vendor’ and the purchaser’s solicitor will require him to appear on your certificate for CGT purposes”. g. The sale completed and the price was paid, but no conveyance or other deed was produced by the Appellant at the hearing before the Commissioner. h. Bank statements show that on 29 January 2007 €2,514,826.91 was lodged to the account "Patrick O'Dwyer and Jackie O'Dwyer Bridging Term Loan" to clear an outstanding loan and a further €1,877,623.41 was lodged into the account of "Patrick O'Dwyer".

i. No CGT was paid in 1986 when the Indenture was created or on the 2006 disposal. Nor did the Appellant did pay capital acquisitions tax in 1986 or 2006. j. The Revenue assessment allowed principal private residence relief equivalent to 50% of the gains but the Commissioner increased this to 60%. k. Although the Appellant states that she did not receive any of the proceeds of the sale of the property, the Commissioners noted “a payment shown on Mr O’Dwyer’s bank statement to ‘Jackie’ of €100,000 on 31st January 2007”. l. 60% of the property was in use as the principal private residence. m. 25% comprised two commercial units and the remaining 15% was office space.

The Determination

4. The Commissioner’s Determination:

a. Noted that s.28 refers to CGT

"… in respect of chargeable gains computed in accordance with those Acts and accruing to a person on the disposal of assets." b. Noted that the Appellant relied on s.2(1) of the Settled Land Act, 1882 (“the 1882 Act”) to argue that; (i) the Indenture created a "settlement" ; (ii) by reserving a right of residence, Mr O’Dwyer created a life interest in the property; and (c) “while subject to academic criticism”, National Bank v. Keegan [1931] remains the authority for the proposition that an exclusive or particular right of residence over a portion of unregistered land created an equitable life estate. c. Noted that while the law relating to rights of residence in unregistered land was changed by the Land and Conveyancing Law Reform Act 2009 (“the 2009 Act”), to deprive the right of residence of its previous character as a life estate, that Act, as the Appellant noted, was introduced after the disposal and thus holds no significance.

d. Noted the Appellant’s argument that the Indenture was a settlement as defined by s.10 - a "disposition...agreement or arrangement...transfer of...property or of any right to...property" and the Appellant relied on s.575 to assert that the Indenture, as a transfer of an asset in consideration of natural love and affection, was a "gift in settlement" constituting "a disposal of the entire property thereby becoming settled property". As a consequence, there was an acquisition for CGT purposes by the trustee, Mr O’Dwyer, of the property in 1986 at its market value. That exposed him to a potential CGT charge in 1986 but, as confirmed by the Appellant’s agent at the hearing, he paid no CGT. e. The Appellant submitted that Mr O’Dwyer relinquished his right of residence and entitlement to the income before the sale of the property in 2006 and the Appellant became absolutely entitled to the property "as against the trustee." Therefore, pursuant to the TCA, s.576(1): "All the assets forming part of the settled property to which the person becomes so entitled shall be deemed for the purposes of the Capital Gains Tax Acts to have been disposed of by the trustee, and immediately reacquired by the trustee in the trustee’s capacity as a trustee within section 567(2), for a consideration equal to their market value." f. The Appellant submitted that that event crystallised a CGT liability for Mr O’Dwyer, the trustee, based on the €4.5 million value. Therefore under s.576, the Appellant acquired the property at that value and, immediately disposing of it, made no gain on its disposal. g. The Appellant contended that the Respondent was pursuing the wrong person for CGT, as Mr O’Dwyer, as trustee, was bound to discharge the tax when the Appellant became "beneficially entitled to the property as against the trustee" when he relinquished his right of residence and entitlement to the income from the property prior to the sale of the Property in 2006.

h. Noted that it is necessary to establish whether the Indenture was a "gift in settlement" thereby becoming "settled property". As the parties, acknowledged, the definition of "settlement" that "includes any disposition, trust, covenant, agreement or arrangement, and any transfer of money or other property" is broad enough to cover most disposals and transactions. As such, many transactions, would become "settled property" unless the term was interpreted appropriately in line with the statutory intention. The Determination cited the comments of Lord Wilberforce in CIR v. Plummer (1979) 54 TC 1 (“Plummer”) as to the meaning of "settlement" in a similar context and accepted the Respondent’s submission that, in determining whether the Indenture was "settled property", recourse was required to the s.5 definition as "any property held in trust" and "settlement" must be read in context and within the confines of the TCA, Part 19, Chapter 3 dealing with ‘Assets held in a fiduciary or representative capacity, inheritances and settlements’. i. noted that the TCA does not define a trust but that Keane’s Equity and the Law of Trusts in Ireland, (3rd ed., Bloomsbury Professional) observes: "Many definitions of a trust have been attempted by textbook writers rather than judges but perhaps the most satisfactory is that of Underhill with the gloss added by Pettit: ‘A trust is an equitable obligation, binding a person (called a trustee) to deal with property owned by him as a separate fund distinct from his own private property (called the trust property) either for the benefit of persons (who are called the beneficiaries or in old cases cestuis que trust) of whom he may himself be one, and anyone of whom may enforce the obligation…’ A trust most characteristically arises because the owner of property disposes of it by will, or by an instrument intended to take effect in his lifetime, a disposition inter vivos. In the former case, the creator of the trust is called ‘the testator’, in the latter ‘the settlor’...

The most obvious occasion for a trust to arise is because the owner of property wishes it to be enjoyed by persons in succession to one another. Thus, a testator may leave property to, or in trust for, his or her spouse for life and afterwards to his or her children. The legal ownership of the property will then be vested in the trustee who will pay the income to the spouse for his or her life after which the children will be entitled to both capital and income. Or a settlor may effect a similar object by deed. It will be seen that the vesting of property in a trustee for the benefit of others is the distinguishing feature of the trust as a legal concept. A trust may arise because it is expressly created by the settlor or testator or because the law presumes it to have been created. In the first case, it is known as an "express trust". Such trusts may be created either by instruments inter vivos or by wills, in which latter case, of course, they only become effective on the death of the testator. They may involve three sets of parties the settlor or testator, the trustee and the beneficiary or two, as where the settlor declares that he holds property in trust for the beneficiary and thus constitutes himself his own trustee.’ j. Concluded that a trust is the relationship which arises where one person, a trustee, holds property - real or personal, and whether by legal or equitable title - for the benefit of some person in such a way that the real benefit accrues, not to the trustee, but to the beneficiaries or other objects of the trust and that, in considering whether the Indenture created a trust, it is necessary to consider the operative part of the Indenture. k. Determined that, notwithstanding Mr O’Dwyer’s rights, the Appellant acquired the legal and equitable interest in the property, which was also confirmed by the 2006 contract for sale Special Conditions 7 & 8 and by the Appellant’s solicitor’s letter to the Respondent dated 4th December 2006 which confirmed that Mr O’Dwyer released his rights to facilitate the sale. Accordingly, the Indenture did not create a trust but a disposal of the fee simple interest to the Appellant, with Mr O’Dwyer retaining rights of residence and income entitlements.

l. Concluded that a Power of Attorney executed by the Appellant in 1991 did not affect any transmission of interests. It did not obviate the need for the Appellant to sign the contract. m. Concluded that Mr O’Dwyer transferred the fee simple interest, carving out a right of residence and the lifetime entitlement to income from the property and that the distinguishing characteristic of a trust (vesting of property in a trustee for others’ benefit) is absent. No person held the property for another person’s benefit in such a way that the real benefit accrued, not to the trustee, but to the beneficiaries or other objects of the trust. On the contrary the Appellant directly held the fee simple. Correspondingly Mr O’Dwyer held the direct right of residence and income. n. concluded that the Appellant acquired both the equitable and legal interest in 1986 subject to the burden of Mr O’Dwyer's right of residence and his income entitlement. It was not "settled property" as essential characteristics of a trust were absent. The Appellant was resident in the State when she disposed of the property in 2006, a chargeable gain accrued so she was liable for CGT under s.29(2). Point of Law:

5. The stated questions of law are whether the Commissioner erred in law in holding: “(a) that the property at issue was not, on foot of the Deed of indenture dated 1st October 1986, "settled property" for the purpose of the CGT settlement provisions contained in Taxes Consolidated Act, 1997, Chapter 3, Part 19, notwithstanding the judgment in National Bank v. Keegan remains the authority for the proposition that an exclusive or particular right of residence over a portion of unregistered land created an equitable life estate prior to the

introduction of the Land and Conveyancing Law Reform Act, 2009?

(b) that the Appellant acquired the legal and equitable interest in the property on 1st October 1986 subject to the burden of Mr O’Dwyer's right of residence and income entitlement and on that basis it was not "settled property "as the essential characteristics of a trust arrangement were absent?"

Relevant Authorities

6. Dealing first with the legislation, the key provision relied upon by the Appellant was s.2(1) of the Settled Land Act, 1882 which defined a "settlement" of land: "Any deed, will, agreement for a settlement or other agreement, covenant to surrender, copy of court roll, Act of Parliament, or other instrument, or any number of instruments, whether made by or passed before or after, or partly before and partly after, the commencement of this Act, under or by virtue of which instrument or instruments any land, or any estate or interest in land, stands for the time being limited to or in trust for any persons by way of succession, creates or is for the purposes of this Act a settlement and is in this Act referred to as a settlement”.

7. Section 18 of the 2009 Act provides that:

“(1) Subject to this Part, where land is-

(a) For the time being limited by an instrument, whenever executed, to persons by way of succession without the interposition of a trust (in this Part referred to as a ‘strict settlement”), … there is a trust for the purposes of this Part.

(2)For the purposes of –

(a) subsection (1)(a), a strict settlement exists where an estate or interest in reversion or remainder is not disposed of and reverts to the settlor or to the testator’s successors in title, but does not exist where a person owns a fee simple in possession, …”.

The TCA

8. The TCA provisions relied upon included the following

a. S.5 definition of settlement “includes any disposition, trust, covenant, agreement or arrangement, and any transfer of money or other property or of any right to money or other property.” b. S.28 concerns chargeable gains "accruing to a person on the disposal of assets". It provides: “(1) Capital gains tax shall be charged in accordance with the Capital Gains Tax Acts in respect of capital gains, that is, in respect of the chargeable gains imputed in accordance with those Acts and accruing to a person on the disposal of assets.

(2) Capital gains tax shall be assessed and charged for years of assessment in respect of chargeable gains accruing in those years.

(3) Except where otherwise provided by the Capital Gains Tax Acts, the rate of capital gains tax in respect of a chargeable gain accruing to a person on the disposal of an asset shall be 40 per cent, and any reference in those Acts to the rate specified in this section shall be construed accordingly.” c. S.29(2) renders a person liable to CGT in respect of chargeable gains accruing to them in an assessment year in which they are ordinarily resident in the State. d. S.75: “A gift in settlement, whether revocable or irrevocable, shall be a disposal of the entire property thereby becoming settled property notwithstanding that the donor has some interest as a beneficiary under the settlement and notwithstanding that the donor is a trustee or the sole trustee of the settlement”. e. S.576 “(1) On the occasion when a person becomes absolutely entitled to any settled property as against the trustee, all the assets forming part of the settled property to which the person becomes so entitled shall be deemed for the purposes of the Capital Gains Tax Acts to have been disposed of by the trustee, and immediately reacquired by the trustee in the trustee’s capacity as a trustee within section 567(2), for a consideration equal to their market value”. f. S.577 “(1)(a) in this section, ‘life interest’, in relation to a settlement –

(i) Includes a right under the settlement to the income of, or

the use or occupation of, settled property for the life of a

person (or for the lives of persons) other than the person

entitled to the right,

(ii) does not include any right which is contingent on the

exercise of the discretion of the trustee or the discretion

of some other person, and

(iii) does not include an annuity notwithstanding that the

annuity is payable out of or charged on settled property

or the income of settled property except where some or

all of the settled property is appropriated by the trustees

as a fund out of which the annuity is payable and there

is no right to recourse to settled property not so

appropriated, or to the income of settled property not so

appropriated.

(b) Without prejudice to subsection (4)(b), where under paragraph (a)(iii) an annuity is to be treated as a life interest in relation to a settlement, the settled property or the part of the settled property or the part of the settled property appropriated by the trustees as a fund out of which the annuity is payable shall, while the annuity is payable and on the occasion of the death of the annuitant, be treated for the purposes of subsection (3) as being settled property under a separate settlement.

(2) Where by virtue of section 576(1) the assets forming part of any settled property are deemed to be disposed of and reacquired by the trustee, then, if that occasion is the termination of a life interest by the death of the personal entitled to that interest-

(a) no chargeable gain shall accrue on the disposal, and

(b) the reacquisition under that section shall be deemed to be for a consideration equal to the market value of the assets at the date of the death.

(3) On the termination of life interest in possession in all or any part of settled property, the whole or a corresponding part of each of the assets forming part of the settled property and not ceasing at that time to be settled property shall be deemed for the purposes of the Capital Gains Tax Acts at the time to be disposed of by the trustee, and immediately reacquired by the trustee, for a consideration equal to the whole or a corresponding part of the market value of the asset.

(4) For the purposes of subsection (3)-

(a) a life interest which is a right to a part of the income of settled property, and

(b) if there is a life interest in a part of the settled property and, where that interest is a life interest in income, there is no right of recourse to, or to the income of, the remainder of the settled property, the part of the settled property in which the life interest subsists shall while it subsists be treated for the purposes of this subsection as being settled property under a separate settlement”

g. S.577A provides that: “Where by virtue of section 576(1) the asset forming Part of any settled property are deemed to be disposed of and immediately reacquired by the trustee on the occasion when a person becomes absolutely entitled to the assets as against the trustee, then, in case that occasion is the relinquishing of a life interest (within the meaning of section 577) by the person entitled to that interest, the trustee shall be given such relief as would be given under sections 598 and 599 to the person who relinquished the life interest-

(a) if the person had become absolutely entitled to the assets as against the trustee at the commencement of the life interest and had continued to be so entitled throughout the period (in this section referred to as the ‘life interest period’) that the life interest subsisted, and

(b) as if any expenditure of the kind referred to in paragraph (b) of section 552(1) that was incurred on the assets during the life interest period by the trustee had been incurred by the person. h. Se.604(10) provides: “This section shall also apply in relation to a gain accruing to a trustee on a disposal of settled property, being an asset within subsection (2), where during the period of ownership of the trustee the dwelling house or the part of a dwelling house mentioned in that subsection has been the only or main residence of an individual entitled to occupy it under the terms of the settlement, and in this section so applied -

(a) references to an individual shall be taken as references to the trustee except in relation to the occupation of the dwelling house or the part of a dwelling house, and

(b) the notice which may be given to the inspector under subsection (8)(a) shall be a joint notice by the trustee and the person entitled to occupy the dwelling house or the part of a dwelling house”. i. Section 613(4) provides that:

"(a) Subject to subsection (5) no chargeable gain shall accrue on the disposal of an interest created by or arising under a settlement (including in particular an annuity or life interest and the reversion to an annuity or life interest)—.

(i) by the person for whose benefit the interest was created by the terms of the settlement, or

(ii) by any other person except one who acquired, or derives that person's title from one who acquired, the interest for a consideration in money or money's worth, other than consideration consisting of another interest under the settlement.

(b) Subject to paragraph (a), where a person who has acquired an interest in settled property (including in particular the reversion to an annuity or life interest) becomes as the holder of that interest absolutely entitled as against the trustee to any settled property, the person shall be treated as disposing of that interest in consideration of obtaining that settled property".

Irish Authorities

National Bank Ltd v. Keegan [1931] IR 344 (“Keegan”)

9. In Keegan, a homeowner signed a memorandum giving his aunt the exclusive lifetime use of two specified rooms in a home in consideration of natural love and affection and services rendered. Although he committed to formalise the arrangement if called upon, no such deed was executed but the parties proceeded on foot of the memorandum. The property owner subsequently deposited title deeds by way of equitable mortgage. When the bank sought to enforce the mortgage, the aunt claimed a life interest in the two rooms. At first instance, Johnston J noted that it was well settled that "a general right of residence and support in a house or upon a farm” did not amount to an estate of the land, adding at p.847 that "the people of Ireland have always had a very keen, not to say punctilious, regard for family obligations and ties, and it is well known that such rights, whether created by wills, by family settlements or even by purchase deeds for value, exist very extensively throughout the whole of Ireland. In the present case, however, the right in question is not a mere right of residence or occupation. The defendant had agreed to give his aunt the use - the exclusive use - of a defined portion of the house; she is to have it for her life, free of charge; and the defendant binds himself, whenever called upon to do so, to execute a legal conveyance carrying out the agreement." Having canvassed English authorities where words “of a much less decisive character” were regarded as giving rise to an estate for life (albeit obiter in one instance), Johnston J concluded that the aunt had an estate for life. The Supreme Court majority agreed. Kennedy CJ noted that residential rights were commonly given in Ireland, especially in farm holdings and by way of provision for testator’s widows, and were of two types, a general right of residence or “a particular right of residence created by reserving or giving the right to the exclusive use during life of a specified room or rooms”. Kennedy CJ accepted that aunt’s right of residence was more than a general right, constituting an equitable interest which took precedence over the bank’s interest.

Bank of Ireland v O’Donnell [2016] 2 ILRM 441 (“O’Donnell”)

10. The Court of Appeal considered the significance of a right of residence in O’Donnell. The issue was whether Mr. and Mrs. O'Donnell’s right of residence in their former home vested in the Official Assignee on their bankruptcy. At para. 45 O'Donnell J. observed: " A general right of residence as understood in Irish law has features pointing in different directions. It is true to say that it is personal in the sense it cannot be assigned by the person entitled to it. … A general right of residence is undoubtedly a right touching on or concerning property and perhaps more importantly has an economic value. … the Official Assignee cannot assert the economic value of the right, or that the right be converted into money, since it has no such value in his hands. He cannot assert or enforce the right for his own benefit and accordingly there is nothing to convert into monetary value. The right is on its own terms both personal and nonassignable… In the case of a right of residence on which analysis I consider is a personal right and which does not vest on adjudication".

11. Accordingly, O'Donnell J concluded that a right of residence is personal and nonassignable and does not create an interest in land.

English and Northern Irish Authorities

Plummer

12. The House of Lords considered the word "settlement" in Plummer. Lord Wilberforce stated at para. 13: "The applicable definition of a "settlement" is to be found in section 454(3): It is ‘any disposition, trust, covenant, agreement or arrangement’...But it still becomes necessary to enquire what is the scope of the words "settlement" and "settlor" and of the words which are included in "settlement" in the context in which they appear. If it appears, on the one hand, that a completely literal reading of the relevant words would so widely extend the reach of the section that no agreement of whatever character fell outside it, but that, on the other hand, a legislative purpose can be discerned, of a more limited character, which parliament can reasonably be supposed to have intended, and that the words used fairly admit of such a meaning as to give effect to that purpose, it would be legitimate, indeed necessary, for the courts to adopt such a meaning”.

13. At para. 43 he added: "The courts which, inevitably, have had to face this problem, have selected the element of "bounty" as a necessary common characteristic of all the "settlements" which parliament has in mind. The decisions are tentative, but all point in this direction. The first clear indication of this was given by Lord Macmillan in Chamberlain v. Inland Revenue Commissioners [1943] at 2 All England Reports, page 200. Dealing with a case arising under the predecessor of section 447 of the Act of 1970 he said that he agreed that the settlement or arrangement "must be one whereby the settlor charges certain property of his with rights in favour of others; but it must confer the income of the comprised property on others, for it is this income so given to others that is to be treated as, nevertheless, the income of the settlor. Well this raises a question of some difficulty and general importance. Any words of the definition should be given the full unrestricted meaning which apparently they have or is some limitation to be read into them, if so, what limitation? If given the full unrestricted meaning, then the section would clearly cover the present agreement and would also cover a large number of ordinary commercial transactions. My Lords, it seems to me clear that it is not possible to read into the definition in exception in favour of commercial transactions whether with or without the epithet ordinary or bona fide to do so would be legislation and not interpretation. If parliament intended such an exception, it could and must have expressed it. But it still becomes necessary to enquire what is the scope of the word "settlement" and "settlor" and of the words which are included in settlement and in the context in which they appear. If it appears on one hand a completely literal reading of the relevant words would so widely extend the reach of the section that no agreement of whatever character fell outside it, but that on the other hand a legislative purpose can be discerned of a more limited character which parliament can reasonably be supposed to have intended, and the words used fairly admitted such a meaning as to give effect to that purpose, it would be legitimate, indeed necessary for the Courts to adopt such a meaning."

Northern Irish Cases

14. In Jones v. Jones [2001] NIR 244 (“Jones”), Girvan J, confirmed that a general right of residence (as opposed to an exclusive right over a specific part of a property) is a contractual licence rather than a trust and the beneficiary of such a right is not in the same position as the beneficiary of a life tenancy under a settlement: "The right of residence favourable to the deceased and the plaintiff reserved by the agreement can fairly be viewed as a form of contractual licence reserved by and granted back to the plaintiff and her husband. In reality it was an integral part of the agreement for the transfer of the land to William by the deceased, and during the lifetime of the deceased and plaintiff it was an irrevocable contractual licence to reside in the premises which the court would protect by an injunction or specific performance, if appropriate, and no issue arises in this case as to whether the right was binding on successors in title."

15. In Re Walker's Application for Judicial Review [1999] NIR 84 (“Walker”), the court considered a deed in which a retiring farmer had gifted his farm to his son, reserving an exclusive lifetime right of residence in the farmhouse for his wife and himself. Girvan J rejected the grantee’s claim to entitlement to a housing executive grant for repairs as a life tenant, stating at p.91: "Where a person grants or reserves an exclusive right of residence the right by definition is intended to be restricted to the very purpose of the grant or reservation.

The grantee will fully appreciate that the right of residence does not, for example, envisage a right to use the premises for some non-residential purpose. Nor would the parties envisage the sale, letting or exchange of the property. If the third party was to attempt to interfere with the property by way of a trespass, then the owner of the property, rather than the person entitled to reside therein, would be regarded as the party having possession of the property for the purpose of any necessary proceedings, (although it may be that the person entitled to the right of residence has separate rights to protect his own residential rights).

There is another additional technical reason why the Appellant cannot succeed in his argument. The deed of the 28th May 1997 does not affect the grant of a life estate to the grantee, Robert Walker. He purports to reserve an exclusive right of residence to himself and his wife but he does not purport to grant either himself or his wife, or both of them, an estate for life. Moreover, the wife is not a party to the deed. Reserving a right to reside in the premises, even if such a reservation could be considered as a grant back) does not purport to convey or transfer a full interest on the premises for the life of the grantor.

At common law accordingly the deed did not create a freehold life interest. The conveyance or creation of a life interest lies in grant (the ancient concept of delivery of seisin being obsolete) and requires either express words granting an estate for life or a conveyance of an apparently complete interest (which would be deemed to be a life estate since the words of limitation for fee simple would be absent)." Girvan J added that, from a technical conveyancing point of view, it is not possible to carve a life interest from a reservation - specific words of grant are required.

If an estate is granted without the words of "in fee simple", conveyancing rules dictate that it effectively becomes a life estate by default. Accordingly, Mr. Walker’s exclusive right of residence did not constitute a life interest or an interest in the property.

The Court’s role on a case stated

16. The role of a court on this case stated was common ground. In Raymond Hughes v. Revenue Commissioners [2019] IEHC 807, Allen J summarised the Court’s approach to such a case stated on a question of law, concluding that authorities such as Ó’Culacháin v. McMullen Brothers Ltd. [1995] 2 IR 217 confirmed five principles which were endorsed in Mac Cárthaigh (Inspector of Taxes) v. Cablelink Ltd. [2003] 4 IR 510: (a) Findings of primary fact should not be disturbed unless there is no evidence to support them; (b) Inferences from primary facts are mixed questions of fact and law; (c) If the judge’s conclusions show that he has adopted a wrong view of the law, they should be set aside; (d) If his conclusions are not based on a mistaken view of the law, they should not be set aside unless the inferences which he drew were ones which no reasonable judge could draw; (e) Some evidence will point to one

conclusion, 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, (for we are not retrying the case) 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.

17. In Mara (Inspector of Taxes) v Hummingbird Limited [1982] ILRM 421 Kenny J set out how a judge should approach a Case Stated as follows: “A Case Stated consists in part of findings on questions of primary fact, e.g.

with what intention did the taxpayers purchase the Baggot Street

premises. These findings on primary facts should not be set aside by the Courts unless there was no evidence whatever to support them. The Commissioner then goes on in the Case Stated to give his conclusions or inferences from these primary facts. These are mixed questions of fact and law and the Court should approach these in a different way. If they are based on the interpretation of documents, the Court should reverse them if they are incorrect for it is in as good a position to determine the meaning of documents as is the Commissioner. If the conclusions from the primary facts are ones which no reasonable Commissioner could draw, the Court should set aside his findings on the ground that he must be assumed to have misdirected himself as to the law or made a mistake in reasoning. Finally, if his conclusions show that he has adopted a wrong view of the law, they should be set aside. If however they are not based on a mistaken view of the law or a wrong interpretation of documents, they should not be aside unless the inferences which he made from the primary facts were ones that no reasonable Commissioner could draw.”

The Appellant’s Submissions

18. The Appellant’s submissions can be summarised as follows: a. The Appellant did not make a disposal for CGT purposes. The Indenture constituted a settlement by Mr O’Dwyer, a deemed disposal for CGT purposes. b. This is reinforced by s.613(4), which excludes a person with a life interest under a settlement having a CGT exposure on the sale of settled property —the CGT exposure is borne by the trustee. c. The reservation of "full right of residence" meant that Mr O’Dwyer was the only person entitled to exercise such rights - he had the exclusive lifetime right of residence in and occupation of the premises.

The term "full right" is defined by the legal dictionary Law Insider meaning that the grantee: "… shall be the only person that is entitled to exercise such right(s) … and that no other person shall be authorised, by the grantor of such rights, to exercise such rights(s) or be granted such right(s)". d. The Indenture was therefore a settlement for CGT purposes, with Mr O’Dwyer having a life interest in the property. Consequently, CGT provisions relating to settlements applied – ss.577A and 604(10). e. The Property was the subject of commercial lettings and the carrying on of an accountancy practice as well as residential use, a fact reflected by the Indenture’s reference, reserving to Mr O’Dwyer the rights to the rents and profits.

On that basis the Appellant distinguished authorities cited by the Respondent, as the cases, including O'Donnell, cited involved residence rights in sole dwelling houses. The Northern Ireland cases likewise centred on right of residence in farmhouses and the associated social and historical nuances. By contrast, this appeal not only included full right of residence/the full right of occupation, but also the right to the rents and profits of the (multi-use) premises rather than a mere right of personal residence. f. The Respondent’s authorities do not concern specific taxation provisions with their own specific definitions such as the widely drawn "gift in settlement" scenario in s.575 and the definition of "life interest" referred to in s.577, an adaptation of s.576 to ensure that the general capital gains principle of no chargeable gains on death applies on the termination of a life interest on death.

Section 575 states: "A gift in settlement, whether revocable or irrevocable, shall be a disposal of the entire property thereby becoming settled property notwithstanding that the donor has some interest as a beneficiary under the settlement and notwithstanding that the donor is a trustee or a sole trustee of the settlement".

g. The Respondent noted that, although Girvan J declined to follow the Supreme Court’s

decision in Keegan in the Northern Irish decision in Walker, on the basis that he (unlike

me) was not bound thereby, in doing so he acknowledged at p.91 the "authority for the proposition that a person who had merely a right of residence in property for his own life had the powers of a tenant for life under the Settled Land Act, 1882". h. Under the Indenture, Mr O’Dwyer had a life tenancy interest, creating a Settled Land Act trust, a settlement for CGT purposes. This conclusion is reinforced by the fact that the Indenture was triggered by his then upcoming remarriage. It ensured that the property passed to the Appellant on his death, while retaining its exclusive use and occupation during his lifetime, including all rents and profits. This conclusion is fortified by broad definitions of “settlement” and “tenant for life” in s.2 of the Settled Land Act, 1882, enacted at a time when tenancy rights were to the fore in Ireland for social and economic reasons. Section 2(5) provides: "The person who is for the time being, under a settlement, beneficially entitled to possession of settled land, for his life, is for purposes of this Act the tenant for life of that land, and the tenant for life under that settlement." i. The Power of Attorney gave Mr O’Dwyer full control over the property and he was trustee of the settlement for CGT purposes - the Appellant cited s.16 of the Settled Land Act, 1890. j. The Respondent’s own guidance notes confirm that an exclusive right to live in a property is a life interest for capital acquisition tax purposes, so it seems difficult to understand why that is not the position for CGT purposes, since the Capital Acquisitions Tax, Act 2003, (“CATA”) has a narrower definition of life interest than the TCA’s s.5772.

k. As espoused by Lord Wilberforce in Plummer p.43

"The courts which, inevitably, have had to face this problem, have selected the element of "bounty" as a necessary common characteristic of all the "settlements" which parliament has in mind." The transfer of the interest in fee simple in consideration of natural love and affection involved "bounty" and therefore a settlement was created. l. There are compelling reasons for concluding that the property became settled property for CGT purposes on 1 October 1986 remaining such until its sale in 2006 resulted in a termination of the life interest. This reflects the fundamental principle behind the CGT legislation, that just as the gain in value while it is settled property accrues to the trustees so does the CGT liability - a liability calculated, where applicable, by taking into account CGT, principal private residence and/or CGT retirement relief under the TCA, ss. 604(10) and 577A respectively. m. The Appellant cited s.613(4) as showing the statutory intention to avoid rendering both beneficiary and the trustee liable for the same monies.

2 "Life interest” as defined in CATA, section 2 as: "an interest (other than a leasehold interest) for the duration of a life or lives for a period certain or any other interest which is not an absolute interest".

n. Accordingly, the Appellant did not dispose of a beneficial interest in the property so the assessment should be discharged or reduced to nil.

19. The Appellant submited that there were two separate streams of interest between 1986 and 2006 and that; (a) Mr O’Dwyer could have sold or assigned his bundle of life interests - he was the only one who had anything of value to sell at that point; (b) The Appellant could theoretically have conveyed her interest but it was only a shell - a reversionary interest on her father’s death. The Appellant noted that the sale could have been dealt with in different ways in 2006. Mr O’Dwyer could have sold as attorney for his daughter and simultaneously conveyed his own life interests to the buyer. However, from a conveyancing point of view, the cleaner option was for him to release his interest, freeing the way for his daughter to simultaneously convey the property free of the encumbrance of the lifetime rights. The commercial driver was the need to accommodate the purchaser’s demand for clear title. The simpler the transaction from a commercial point of view, the better from the purchaser’s viewpoint – it would have been unnecessarily complicated to transfer two bundles when a full clean title could be directly furnished. However, until the transaction there were two streams of interest. Mr O’Dwyer's stream encompassed both the rent and the full rights of occupation.

20. The Appellant submitted that Mr O’Dwyer could have decided not to live in the house, leasing it to someone else and keeping the additional rent. His entitlement to rents under the Indenture is not confined to rents derived from the commercial areas. There was nothing in the Indenture to prevent his leasing the whole property. The wording gave him full lifetime control. This contrasted these rights with the limited right of residence normally provided in the farmhouse cases, personal, non-assignable rights. Here there was a reservation of full occupation to include, for example, the liability to pay the commercial rates and any taxes.

The Respondent’s submissions

21. The Respondent’s submissions can be summarised as follows: a. A "settlement" of land was originally defined by s.2(1) of the Settled Land Act, 1882 (which is not a taxing provision), as follows: "Any deed, will, agreement for a settlement or other agreement… whether made by or passed before or after, or partly before and partly after, the commencement of this Act, under or by virtue of which instrument or instruments any land, or any estate or interest in land, stands for the time being limited to or in trust for any persons by way of succession, creates or is for the purposes of this Act a settlement and is in this Act referred to as a settlement”. Therefore, to be a settlement, the deed must create a succession of interests. However, no such succession arises here - the Property was conveyed to the Appellant in its totality, subject only to the rights reserved by Mr O’Dwyer. b. The 1882 Act was repealed by the 2009 Act. Section 2(1) of the 1882 Act was restated by s.18(1) of the 2009 Act as follows: "...where land is (a) for the time being limited by an instrument whenever executed to persons by way of succession without the interposition of a trust (in this Part referred to as a ‘strict settlement’) ... there is a trust of land for the purposes of this Part". c. Thus, the existence of a settlement of land fundamentally depends upon the land being granted or conveyed to persons who are intended to hold the land in succession. There must be a succession of interests created in the land in order for the grant or conveyance itself to qualify as a settlement. This is confirmed by s.18(2)(a) of the 2009 Act which states: "For the purposes of subsection (1)(a) a strict settlement exists where an estate or interest in reversion or remainder is not disposed of and reverts to the settlor or to the testator’s successors in title but it does not exist where a person owns a fee simple in possession.”

It is clear that the Indenture was not a settlement as it did not create or give rise to a succession. Section 18(2) is a reenactment of s.2(1) of the 1882 Act. d. The Indenture was not a settlement as it did not create or give rise to a succession of interests. The Indenture simply vested the fee simple interest in the lands in possession in the Appellant. The reservation of a general right of residence and other rights for Mr O’Dwyer’s lifetime did not give rise to a settlement or a trust. e. In Walker the Northern Irish High Court rejected the proposition that a retired farmer’s lifetime right of residence in a farmhouse meant that he was a life tenant and thus entitled to seek a housing grant for repairs, stating at p.91: "Where a person grants or reserves an exclusive right of residence the right by definition is intended to be restricted to the very purpose of the grant or reservation. The grantee will fully appreciate that the right of residence does not, for example, envisage a right to use the premises for some non-residential purpose. Nor would the parties envisage the sale, letting or exchange of the property.” While Walker confirmed that persons with an exclusive right of residence may enjoy some of the same powers as a tenant for life under a trust or settlement, they are not tenants for life. A person with a mere right of residence does not have any freehold estate or interest vested in him. Also, the deed before the Court did not contain any appropriate words of grant or limitation to confer any estate or interest in the lands upon the donor. f. In Keegan, the Supreme Court found that an exclusive right of residence was equivalent to a life estate. However, in modern cases there is doubt whether this is good law. Jones is authority for the proposition that Mr O’Dwyer had an irrevocable contractual licence to do certain things in the property, i.e. live there, occupy and collect the income. However, the indenture did not confer upon him a property interest capable of being sold, leased or assigned.

g. O'Donnell likewise confirmed that a general right of residence is personal and non-assignable. Similarly in this case, the rights were personal to the Grantor and were not capable of being granted or conveyed to a prospective purchaser. Furthermore, it was not a settlement as it vested the fee simple interest in possession in the Appellant, and was therefore excluded from the definition of a settlement by s.18(2)(a) of the 2009 Act. Nor were any words used by the Grantor in the Indenture to suggest he intended to create a trust, and the Indenture does not contain appropriate words of grant or limitation that would confer any interest or estates - interest in the lands upon the Grantor or reserving any such estate or interest.

Therefore, Mr O’Dwyer fully disposed of his interest in the property under the Indenture. h. The Special Conditions in the contract for sale confirm that Mr O’Dwyer joined the contract merely to release rights reserved to him under the Indenture. The Special Conditions do not suggest that he had any beneficial or other interest in the property to be conveyed or assured to the purchaser. It is also consistent with the statement to the Revenue Commissioners by Martin J. Kearns, Solicitor, in his 2006 letter that Mr O’Dwyer was not a "disponer", he had joined the contract for sale to release the rights he held over the land.

It is also significant that Mr O’Dwyer was merely "releasing" rights rather than taking positive steps to convey, grant or assure any estate or interest to the purchaser. i. There was no evidence that the property was held under a settlement or trust. The title documents show that the entire legal and equitable interest in the property was held by the Appellant pursuant to the Indenture, subject only to rights reserved by Mr O’Dwyer under that Indenture. Although the contract for sale identified both the Appellant and Mr O’Dwyer as the vendors, in reality the legal and beneficial interest was disposed of by the Appellant subject only to the release by Mr O’Dwyer of the rights reserved by him in 1986. j.

The CGT liability pursuant to s.28, concerns chargeable gains "accruing to a person on the disposal of assets". S2) renders a person liable to CGT in respect of chargeable gains accruing to them in an assessment year when ordinarily resident in the State. k. Section 598 contains provisions regarding CGT retirement relief. It does not apply here as the Appellant rather than Mr O’Dwyer disposed of the Property. Furthermore, it had not been in his ownership preceding its 2006 disposal having been in the Appellant’s sole ownership under the Indenture. l.

The definition of a "settlement" in s.10 TCA, is wide. However, in Plummer the House of Lords noted that if a completely literal reading interpretation would encompass any agreement of whatever character, it would be necessary, for the courts to adopt a more limited meaning if “a legislative purpose character can be discerned which parliament can reasonably be supposed to have intended, and that the words used fairly admit of such a meaning as to give effect to that purpose”. m. At p.43 he added that in tackling that issue the Courts had “selected the element of ‘bounty’ as a necessary common characteristic of all the "settlements" which parliament has in mind”. n. The definition is open ended and parliament could not have intended a settlement to encompass anything, so it must have some meaning.

To discern that meaning, one must look at the purpose in the legislation. o. In the Indenture, Mr O’Dwyer conveyed his entire legal and beneficial interest in the property to the Appellant, reserving only a right of residence and a right to the rents and income from the property. The Indenture did not create a joint tenancy in the property between father and daughter, because the Appellant was the Grantee in her sole name. Nor did it create or give rise to a trust, since both the entire legal and beneficial interest in the property was conveyed to the Appellant and she held that interest thereafter subject only to the rights reserved by Mr O’Dwyer. p. The Appellant has invoked section 577(1)(a) to suggest that rights reserved by Mr O’Dwyer constitute a "life interest".

However, the definition of a "life interest" in s.577(1)(a) only applies to that section. Insofar as it deals with the termination of a life interest on the beneficiary’s death, s.577 does not apply here. q. The Appellant also relies on s.577A which deals with the relinquishment of a life interest by the person entitled to it on a disposal by the trustee but those provisions only apply in a case in which the person entitled to the life interest: "Had become absolutely entitled to the assets as against the trustee at the commencement of the life interest and had continued to be so entitled throughout the period...that the life interest subsisted". r.

Mr O’Dwyer was never "absolutely entitled" to the property that he conveyed to his daughter by the Indenture. He enjoyed a right to reside in and occupy the property and a right to collect the income. He never enjoyed any of the other rights that would accrue to a person holding a life interest, for example, the right to lease or to mortgage it or even the right to alter its use. This is consistent with Walker and Jones. s. An exclusive right of residence may be equated with a life interest in property for tax purposes but only for the purposes of valuing the right.

There is no statutory or judicial authority to suggest that an exclusive right of residence and a right to collect income from the property amounts to or constitutes a life interest. Under the Indenture, the entire legal and beneficial interest in the property was granted and conveyed to the Appellant. Its operative words confirmed that. The Indenture did not suggest that it was intended that the Appellant would hold the property in trust. Furthermore, the disposal of the property in 2006 was affected by the Appellant alone. The Appellant was the disponer and Mr O’Dwyer was included merely to release his rights.

That is consistent with the explanation from the solicitor who acted for the Appellant in the transaction. Although the Appellant did not produce a copy of the deed of conveyance which effected the disposal of the property in 2006 it appears from her stamp duty return that the date of the conveyance was the 17th of December 2006, and the vendor was the Appellant alone. t. The Appellant bears the burden of proof. She has failed to show that Mr O’Dwyer held a life interest rather than merely a right of residence and a right to income. u. A settlement can be anything on the face of it, but settled property must be held in trust.

The Appellant must show that the property was settled property and that there was a trust, even though a settlement itself is open ended. As the Appellant has failed to demonstrate the existence of a trust, the appeal is misconceived.

Analysis

22. The Determination’s primary findings of fact are set out at para. 3 above. These are not controversial - the details of the Indenture and of the 2006 transaction are common case. However, the legal effect, implications and consequences of those transactions are not common cause. At the outset, I can eliminate three matters which I consider immaterial: a. The 1991 power of attorney cannot be relied upon as part of the factual matrix to the 1986 Indenture or to support the assertion of a beneficial interest. Nor does it have any relevance in the context of the 2006 disposal as it was not used in that transaction.

It does not appear to have played any relevant role in the present case nor do I attach any significance to its mere existence. It was not even specifically directed at the property – it could have been required for other reasons. It does not assist my determination. b. Secondly, the Respondent’s emphasis on the 2009 Act is misconceived. Apart from the fact that the property was unregistered land, the 2009 Act could not alter the legal effect of a conveyance three years earlier, much less that of the Indenture nearly a quarter century before.

While the Respondent hinted that it merely codified existing law, it did not substantiate that submission to my satisfaction. In the absence of any context, it seems as likely that the provision was designed to modify the previous Irish law position, being the law as it stood at the time of the 1986 and 2006 transactions. To the extent that the 2009 Act changes the test, it is not relevant. I must consider the position which prevailed at the time of the 1986 Indenture and the 2006 sale, there being no suggestion that the 2009 Act had retrospective effect.

In the circumstances, the 2009 Act does not assist my analysis. Furthermore, although, the Respondent’s submissions referred to the 1882 Act as having “originally” defined a settlement, I regard the 1882 Act as the operative provision for present purposes – the word “originally” is otiose. c. The determination noted that the appellant did not produce a copy of the conveyance, and the Respondent emphasised this in submissions (without saying why it mattered). Of course, the appellant bore the burden of proof and if she failed to produce relevant evidence which was within her possession, the Commissioner could draw reasonable inferences from such reticence.

However, it is not apparent to me that there is any basis for any particular inference here nor does it seem that anything turns on the failure to produce the conveyance. The appellant disclosed the contract for sale which set out the basis for (and parties to) the transaction. It is not obvious to me that there was any need to produce the conveyance as well.

23. Although I have considered the determination and the oral and written submissions and the annexed statutory provisions, it seems to me that my answer to the case stated essentially comes down to the proper construction of the 1986 Indenture, seen in its factual matrix. I have also considered whether the 2006 transaction changes the position.

24. The Determination and the Respondent’s submissions hinge on their analysis that, firstly, the Indenture transferred the entire legal and beneficial interest to the appellant and that, secondly, the 2006 transaction confirmed that she was indeed both the legal and beneficial owner at that time and thus for the entire period. I disagree with both propositions.

The Indenture

25. The only definition of the expression "full right" as advanced in the Indenture was proposed by the Appellant and seems fair. I will adopt it since the Respondent did not appear to take exception to its appropriateness or to put forward an alternative.

26. The Determination correctly identified features of the Indenture which, in isolation, could be seen as transferring both the entire legal and beneficial interest to the Appellant such as the vesting of ownership in fee simple in the Appellant, and doing so ‘free from encumbrances’. These provisions were pivotal to the Determination. However, there were contraindications in the Indenture which also fall to be considered and did not feature as prominently in the Determination. These include the reserving and excepting from the fee simple both Mr. O’Dwyer’s full right of residence and occupation of the Property and his right to the rents and profits generated by the Property. These point to a different conclusion.

27. It is not uncommon for a contract, deed or indenture to contain provisions which may appear difficult to reconcile. In such circumstances to understand the true meaning of a document, it is necessary to understand the document as a whole to understand how such provisions relate to each other and to determine the meaning and effect of the document as a whole. The basic rules of contractual interpretation apply. In Commissioners for HMRC v Raymond Tooth [2021] UKSC 17, the UK’s Revenue and Customs sought to rely on the taxpayer’s submission of an incorrect return to re-open time limits on assessments on the basis that certain fields did not permit certain data to be entered, preventing the correct completion of the form. Noting that the return should be construed as a whole like any other document, the Supreme Court judgment gave short shrift to HMRC’s contentions. At paras. 49, Lord Briggs and Lord Sales, giving the judgment of the Court, observed as follows: “It almost goes without saying that the meaning of particular words or phrases in a document of any kind is generally to be ascertained by a contextual approach, that is by appraising the critical passage in the light of its context as part of the document read as a whole. There is no reason in principle why the same should not be true of a tax return”.

28. It seems to me that when the Indenture is examined in its entirety and in its factual context – a father providing for his daughter on the eve of his imminent remarriage – then its meaning and effect becomes clear: a. The evident intention was to ensure that the Appellant would be provided for on her father’s death so her position would not be prejudiced by her father’s remarriage. This was achieved by transferring the property into her name, making her the legal owner as and from the execution of the Indenture. b. However, Mr O’Dwyer was concerned to retain the ownership and control of the property for the rest of his life.

The Indenture achieved this passing on the property to the next generation in due course (while avoiding the unhappy fate of the impetuous King Lear who prematurely ceded control of his kingdom, with unfortunate consequences). The Indenture enshrined Mr O’Dwyer’s entitlement to enjoy the full right of residence in the property for his entire life and provided that he retained all rents and profits. It did not give the Appellant any right to access, use or benefit from the property during her father’s lifetime. It did not give her a right of residence or a share in the profits or a say in how it was managed.

She would receive the fruits of ownership when her father died, and not before. c. When the Indenture is read as a whole – as it must be – its meaning and effect was clear. Its provisions in this regard are far more extensive than the general rights of residence cases cited by the Respondent. For example, in Walker, the Northern Irish case primarily relied upon by the Respondent, Girvan J noted that the right of residence in the particular case would not have allowed the grantee to use the premises for non-residential purposes or to sell, let or exchange the property.

That is not the case here. Unlike Walker, Mr O'Dwyer’s retained rights would have permitted such steps in relation to his interest during his lifetime (only the legal ownership and reversionary interest remained with the Appellant in the meantime). d. In reality, the only change effected in 1986 was to vest legal title in the Appellant and to ensure that beneficial ownership would revert to her on her father’s death. Mr O’Dwyer did not cede any rights at all in respect of the effective use or enjoyment of the property prior to his death. Those rights were reserved exclusively to him.

In those circumstances, it seems incontrovertible that, although the Indenture transferred legal ownership, Mr O’Dwyer remained the beneficial owner until death (or surrender). e. I am not convinced by the Respondent’s submission that the 1986 Indenture vested the fee simple interest in the Appellant, meaning that the reservation of a general right of residence and other rights for the lifetime of Mr O’Dwyer did not give rise to a settlement, trust or equitable interest. That argument ignores the reality that the Indenture incontrovertibly gave Mr O’Dwyer for his lifetime full rights of occupation and possession, including absolute freedom to reside in the property and to enjoy all profits and rents.

Although the Appellant became the titular owner, she could exercise no rights during her father's lifetime - whether to dwell in the property or to share in its rents and profits. This put her in a fundamentally different (and weaker) position to the grantors’ position in Keegan, Walker and other such cases. The rights reserved by Mr O’Dwyer were far more extensive than the grantee’s rights in those cases in which the grantor typically, retained extensive rights in respect of the use and enjoyment of the property as a whole. Reflecting the culture of the time, the favoured son (and it tended to be a son) took over the farm while allowing the aged parents to live out their declining years under “his” roof and protection.

The fact that they were provided for, did not obscure the fact that the farm was now “his” – the baton had passed to another generation. By contrast, the Indenture gave the Appellant no right to enjoy or benefit from the property during her father’s lifetime. She was its legal owner, but the benefit (and control) remained with her father until his passing. To apply Girvan J’s example in Walker, it seems to me that, if the need arose to prevent a trespasser, then Mr O’Dwyer would probably have been the appropriate party to take such action.

Although the Indenture made the Appellant the legal owner, its practical effect was to ensure that the baton (in terms of rights of ownership and control and enjoyment of the benefits of ownership) would pass on her father’s death but not before. The evident object and intention was to ensure that Mr O'Dwyer retained beneficial ownership for his lifetime, after which it would go to his daughter.

29. I accept that it is confusing that the Indenture referred to the transfer of the fee simple to the Appellant, terminology which, in isolation, supports the Respondent’s position that she acquired both legal and equitable ownership in 2006. However, that phrase is overridden by the sweeping reservation of rights by Mr O’Dwyer. The deed must be construed as a whole. The lifetime retention of full right of residence and the right to the income and profits contradict the passing of the equitable title. In reality, only legal title went to the Appellant, equitable title remained with Mr O’Dwyer, including all rights in equity such as the right to the income: a. I reject the contention that Mr O’Dwyer couldn't have sold or assigned his entitlement to the interest and profits (at least). As the Appellant observed, there is no obvious reason he couldn't have done so. He could have rented the entire property and there is no obvious reason he couldn't have sold or assigned the right to such rents. b. He could also have excluded the Appellant from the property had he wished. In fact, despite the language used, when the Indenture is construed in its totality it is clear that he did not in fact transfer a fee simple, the interest in possession. To the contrary, the Appellant never had possession or even right to possession.

30. The Respondent relied on Walker in particular, as supporting its contention that a general right of residence does not give rise to an interest in property. Firstly, as noted above, Mr O’Dwyer’s retained rights were far more pervasive than the general right of residence in Walker, which is distinguishable on that ground alone. Secondly, Walker turned on the construction of Northern Irish housing legislation (to determine whether an exclusive lifetime right of residence in a farmhouse rendered the grantee a life tenant within the meaning of particular provisions). Care would be required in applying such an authority in other contexts even if it was binding in this jurisdiction. Thirdly, although Girvan J concluded that, from a technical conveyancing point of view, it is impossible to carve a life interest out of a reservation

- specific words of grant would be required to secure that outcome, no authority was cited to confirm that that is the position in this jurisdiction. It seems to me that such a proposition is at odds with the Supreme Court’s decision in Keegan. That brings me to the most fundamental reason for not following Walker. To the extent that there is a conflict between Keegan and Walker, the former represents the law in this jurisdiction. In fact, I suspect that – if confronted with the facts of this case - Girvan J may have recognised that an equitable interest arose because, unlike Walker, Mr Dwyer effectively retained the entire beneficial interest for his lifetime including the rights to rents and profits, supporting the conclusion that he enjoyed a life interest which he could sell or assign at least in part.

31. In any event the Respondent failed to satisfy me that I would have any basis to ignore the Supreme Court’s decision in. Keegan, even if I disagreed with that decision (and I have expressed no such view). It accepted that the Supreme Court found that an exclusive right of residence (which was, in my view, far more limited than the right retained by Mr O’Dwyer in this case) was equivalent to a life estate. However, the Respondent dismissively referred to “doubt” as to whether this is a correct reflection of the law. I am not satisfied that there is a consensus that Keegan was wrongly decided but, in any event, the decision to revisit such a long standing authority would require careful analysis of the jurisprudence at an appellate level, on the basis of more detailed submissions than were offered to me. In the meantime, I am bound by Keegan which is directly applicable.

32. The Respondent’s repeated submission that Mr O’Dwyer merely had an irrevocable contractual licence to do certain things, might have had greater force if he had simply reserved a right of residence. However, the Respondent repeatedly failed to address the breadth of the rights reserved to Mr O’Dwyer. It is because the Indenture reserved unto Mr O’Dwyer for his lifetime all benefits of the property including residence, rents and profits that he retained a lifetime beneficial interest.

33. The Court of Appeal’s judgment in Bank of Ireland v. O'Donnell [2016] 2 ILRM 441 does not assist the Respondent. It concerned whether a general right of residence in a property vested in the Official Assignee on bankruptcy. The Court of Appeal concluded that it did not because, on its proper construction, it was a personal right which vested in the grantee, was not transferrable and had no economic value to the Official Assignee. At most, O'Donnell established that a general right of residence was personal to a bankrupt and therefore did not vest as an asset in bankruptcy. However, in this case, the rights to rent and profits in particular were not personal - if Mr O’Dwyer had gone bankrupt, they would have vested in the Official Assignee. Accordingly, in bankruptcy, the outcome would have been different due to the nature of Mr O’Dwyer’s rights. The right to receive rent and profits is, in principle, assignable, has value and thus would have vested in the Official Assignee on bankruptcy. Accordingly, that decision is confined to the narrow right of residency allegedly in issue therein.

34. However, it is interesting to note that at paragraph 45, O'Donnell J (as he was) observed that a general right of residence as understood in Irish law “has features pointing in different directions”. He commented that such a general right of residence is personal in the sense it cannot be assigned by the person entitled to it, which might suggest it did not vest on adjudication since assignment is one test of whether a right vests in the Official Assignee. He noted that in AA, Laffoy J described “the acid test” as “whether a right was assignable”, adding that she also observed that the authorities “involved an assessment of whether the relevant personal right had economic value, so as to vest in the trustee in bankruptcy”. The Court of Appeal concluded that a general right of residence was undoubtedly a right touching on or concerning property, a right with an economic value. However, it was inconceivable that the Official Assignee could assert a right that was personal to the bankrupt and not assignable. Since the grantor would not be obliged to permit the Official Assignee to reside in the property, the Official Assignee could not assert the economic value of the right, or demand that it be converted into money, as it had no value in his hands. He could not assert or enforce the right for his own benefit so there was nothing to convert into monetary value. The right was personal and non-assignable. By contrast, the Indenture did not prevent Mr O’Dwyer assigning his rights and the rent would have vested in the official assignee in the event of his bankruptcy.

35. The terms and structure of the 2006 transaction do not affect my conclusion that Mr O’Dwyer retained a lifetime beneficial interest in the property under the Indenture. The Respondent’s submissions and, indeed, the Determination, relied on the fact that the Special Conditions in the contract for sale confirmed that Mr O’Dwyer had joined the contract merely to release his rights under the Indenture. The emphasis on this point is misplaced. From a conveyancing perspective, the Appellant had to be a vendor as she had legal title. Mr O’Dwyer’s participation was also essential as the buyer also had to be assured that it was securing good title free of charges or other encumbrances, legal or equitable and with vacant possession. As the Respondent’s submissions noted, the 2006 transaction could have been structured in other ways. Mr O’Dwyer and the Appellant could both have been named as vendors with each transferring their respective interest directly to the buyer. In other words, rather than releasing his rights to the Appellant so as to allow her to transfer the entire legal and beneficial ownership to the buyer, she could have transferred her legal title and reversionary interest to the buyer and Mr O’Dwyer could have transferred his beneficial interest directly to the buyer as well. However, it was just as effective, and simpler, for Mr O’Dwyer to surrender his interest to the Appellant as part of the 2006 transaction, enabling her to transfer legal and beneficial ownership. It was elegant and logical from a conveyancing perspective to adopt a latter route. I do not consider that such mechanics or matters of form alter the substance as to the effect of the reservation of rights in the Indenture between 1986 and 2006 or the reality of the transaction in 2006, a reality reflected in the movement of funds. Indeed, the perception of the Appellant as the vendor in 2006 ignores the implications of two fundamental issues.

36. The first aspect of the 2006 transaction which the Respondent’s submissions did not address is that the transaction simply could not have occurred without Mr O’Dwyer’s consent. If the Appellant had acted unilaterally, she could only have transferred legal title and a reversionary interest on her father’s death – she had little of economic value to sell. She could not even offer vacant possession.

37. The second overlooked aspect of the 2006 transaction is that the economic value of the transaction essentially depended on the Appellant’s participation and the surrender of his rights to the property. This was reflected in the division of the proceeds of sale. The division is noted in the Commissioner’s findings, the implications of those findings (such as what they tell us about the substance of the Indenture and the 2006 sale and the value of the respective interests) were not taken to their logical conclusion. The Commissioner’s factual determinations (H) and (K) reveal the substance of the protagonists economic interests:

(h) Bank statements show that €2,514,826.91 was lodged on 29 January 2007 to the account "Patrick O'Dwyer and Jackie O'Dwyer Bridging Term Loan" to clear an outstanding loan and a further €1,877,623.41 was lodged into the account of "Patrick O'Dwyer" on the same day.

(k) Although the Appellant states that she did not receive any of the proceeds of the sale of the property, the Commissioners noted “a payment shown on Mr O’Dwyer’s bank statement to "Jackie" of €100,000 on 31st January 2007”.

38. Firstly, those findings confirm that more than half of the price went to pay down debt, presumably on the property. There is no explicit finding as to the origin of the joint loan nor any suggestion that the Appellant was a beneficiary of the monies originally advanced on the loan. There is no finding as to whether it was, for example, a pre-existing debt incurred by Mr O’Dwyer prior to the Indenture which had to be put into joint names to maintain its precedence over the Indenture or whether it reflected subsequent borrowings for Mr O’Dwyer’s benefit, or the Appellant’s or both. In the absence of a specific finding, it seems reasonable to assume that the loan related to the property and thus took precedence over both O’Dwyer’s interests, but the point is not clear.

39. In any event, in finding (K), the Commissioners note the €100,000 payment to “Jackie”, apparently the only payment to her from the proceeds of sale. It was reasonable to conclude that the Appellant was the payee. However, it is not clear whether the commissioner was reaching a conclusion as to the basis for that payment nor, if that was the intention, is there any clarity as to the basis for any such conclusion. There could be various explanations for the payment. It may have represented the Appellant’s "share". Alternatively, it could, perhaps, represent, for example, repayment of monies owed to the applicant or have been a gift. I make no finding in respect of these possibilities but note that the apparently undisputed evidence before the Commission was that the Appellant did not benefit from the proceeds of sale; against this there is no express finding that the €100,000 payment was a share of the proceeds of the property nor is it evident that there would have been a factual basis for such a finding.

40. Furthermore, the decision does not seem to consider the implications of its findings at (H) and (K) as to the ownership of the property. The Appellant only received – at most - €100,000 of the €4.5 million paid for the property. Even if the equity after paying off the debt is regarded as €1,877,623.41 or €1,977,623.41 – it is not clear whether the figure included the €100,000 - Mr O’Dwyer received €1,877,623.41 compared to the €100,000 paid to the Appellant, which may or may not have reflected a share of the proceeds. The distribution of the proceeds of sale is compelling evidence not only of the parties’ contemporaneous understanding as to the equitable ownership but of the substance of their respective interests from 1986 to 2006. If the Appellant was the beneficial owner, why did she not retain the proceeds of sale? The famous Watergate instruction to “follow the money”, reveals the truth that, whatever language may be used, the transfer of funds may give a greater insight as to facts on the ground. In this case, following the money and examining the substance of the 1986 Indenture and the 2006 transaction rather than particular phraseology would support the

conclusion that Mr O’Dwyer remained the beneficial owner at the time of the sale. Otherwise the allocation of the purchase monies is inexplicable.

41. The Determination noted the vendor’s Solicitor contemporaneous explanation of the 2006 transaction to the Revenue Commissioners. I presume that the solicitor’s phraseology was meant to impart that the Appellant, as legal owner, was the vendor and that Mr O’Dwyer was a party to evidence the release of his rights, thus passing clear title. It seems to me that that was accurate. I have not seen the context of the correspondence but as matters stand it is not obvious to me that, in the absence of specific enquiries from the Revenue (which, of course, they could have advanced at any time) the solicitor could reasonably have been expected to provide further detail in respect of the nature of the rights or interests previously enjoyed by Mr O’Dwyer under the 1986 transaction in circumstances in which he had surrendered them as part of the 2006 transaction or the rationale for the structure of the agreement. In any event, the solicitor’s correspondence cannot change the objective legal effect and consequences of the 1986 Indenture or the 2006 transaction.

42. The Respondent’s submissions (and, indeed the Determination) appeared to accept that, read literally, the Indenture would seem to be a settlement within the 1882 Act, but say that, as appears from Plummer, that cannot have been the legislative intention and to create a valid settlement, there must be some element of “bounty”. However, I agree with the Appellant’s submission that Plummer itself demonstrates that natural love and affection can fulfil that requirement. I am satisfied that the requirement was met on that basis in the context of the Indenture, in which Mr O’Dwyer provided for his child prior to his remarriage.

43. As outlined above, I respectfully disagree with the Determination’s conclusions that, notwithstanding Mr O’Dwyer’s rights, the Appellant acquired both the legal and equitable interest in the property in the Indenture and that the Indenture did not create a trust but a disposal of the fee simple interest to the Appellant with mere rights of residence and income entitlements for Mr O’Dwyer. In my view, the reservation of such extensive and overriding interests did vest a lifetime equitable interest in Mr O’Dwyer. Legal title transferred to the Appellant but the benefit stayed with Mr O’Dwyer for life.

44. It seems to me that my conclusion naturally flows from Keegan, the only Irish authority on point. It confirmed that Ms Keegan’s right of residence and exclusive use of a specific part of the property in the consideration of natural love and affection and services rendered gave rise to an equitable interest. The claim to an equitable interest in this case is far stronger because there is full and exclusive right of the entire property along with the rights to all income. In the circumstances, a trust was created in 1986 and the Property became settled land. The equitable interest was then surrendered prior to the conveyance of the land in 2006 to clear the title for the purchaser to ensure there was no residual equitable interest on the property. The Appellant can only be deemed to acquire the property at the same time as she sold it, or just before she sold it, at market value and sold on at the same price.

45. For the same reasons, I also respectfully differ from the conclusion that a distinguishing characteristic of a trust (the vesting of property in a trustee for the benefit of others) was absent. The appellant had legal title but Mr O’Dwyer retained the benefits of ownership for his lifetime, the right to the full use of the property and to the income. Accordingly, the fundamental characteristics of a trust were present - one person with legal title, another with the benefit.

46. Turning to other points raised by the Respondent: a. The Respondent repeatedly submitted that the Indenture vested the fee simple in the Appellant’s sole name subject only to rights reserved by Mr O’Dwyer. However, that ignores the totality of the rights retained by Mr O’Dwyer, which meant that he had full rights of enjoyment of the property and its revenues for his lifetime. b. The Respondent emphasises that in 2006 Mr O’Dwyer merely "released" rights rather than positively conveying, granting or assuring any estate or interest to the purchaser.

Again, this submission is misplaced. The release of rights was entirely sufficient to extinguish Mr O’Dwyer’s interest in and right to the property. Nothing more was required in circumstances in which the legal and beneficial interests were effectively united once again. A conveyance or grant by Mr O’Dwyer would only have been necessary if the transaction had been structured on the alternative basis that he would transfer his equitable title to the buyer and the Appellant would simultaneously transfer her legal title and reversionary interests.

Either option was effective and the choice of t route does not change the substance of the original transaction. c. The Respondent argues that, to fall within the 1882 definition of “settlement”, a succession of interests must be created. However, the Indenture creates such a succession - Mr O'Dwyer retained the full right to residence, profits and rents for his lifetime, following which they passed to the Appellant. d. The Respondent’s submission that the Special Conditions did not suggest that Mr O’Dwyer had any beneficial or other interest that required to be conveyed or assured to the purchaser misses the point.

Mr O’Dwyer surrendered his interest to allow the sale to proceed. In the absence of any such concession ,the sale would have needed to refer to and would have been subject to his interest and the special conditions would doubtless have reflected such a requirement in that scenario. However, the requirement was obviated by Mr O’Dwyer’s release of his rights immediately prior to the transfer to the buyer. e. The Respondent argued that s.577 and 577A, which the Appellant relied upon, did not assist her because, for example, the definition of a "life interest" in s.577(1)(a) applies to the provisions of that section only and the provision does not apply to the extent to which it relates to the situation in which a life interest has terminated on the death of the beneficiary whereas s.577A deals with a beneficiary’s relinquishment of a life interest on a trustee’s disposal.

The Respondent submitted that those provisions only apply where the person entitled to the life interest "Had become absolutely entitled to the assets as against the trustee at the commencement of the life interest and had continued to be so entitled throughout the period...that the life interest subsisted". While such points are arguable, there are equally tenable counter arguments and I need not resolve those issues to address the case stated. I will therefore confine my ruling to the pertinent issues. f. The Respondent’s submission that s577A was inapplicable because Mr O’Dwyer was never "absolutely entitled" to the property that he conveyed to his daughter by the Indenture is premised on its argument that the only rights retained by Mr O’Dwyer were limited rights.

The Respondent asserts that Mr O’Dwyer never enjoyed the other rights that would accrue to a person holding a life interest, such as the right to lease the property or the right to mortgage the property or even the right to alter the use of the property. Citing the Northern Irish cases, Walker and Jones (which do not in my view reflect the (pre-2009) law in this jurisdiction because of the divergence from Keegan), the Respondent argues that in the absence of such rights Mr O’Dwyer did not have the absolute right to the property required by s.577A, rendering that provision inapplicable.

However, even if (which I doubt) the law was as stated by the Respondent, the submission fails on the facts, because the Indenture does not prevent Mr O’Dwyer from leasing the property or selling his lifetime interest. Accordingly, I am not convinced that the Respondent is correct in its attempt to distinguish the provisions cited by the Appellant. However, I do not need to determine all those issues for present purposes. g. I agree with the Appellant’s submission that the suggestion that recourse must be had to s.5, which defines property held in trust, to determine whether there was a settlement would lead to a circularity in defining trust by reference to a section saying "any property held in trust" - the trust must arise to trigger s.5.

h. I disagree with the conclusion that, notwithstanding Mr O’Dwyer's retained rights, the Appellant acquired the legal and equitable interest in the property and that this was confirmed by the 2006 contract of sale. The evidence suggests that Mr O’Dwyer surrendered his rights in 2006, thereby vesting the full equitable and legal title in the Appellant at that point, and only at that point. That was for the benefit of the purchaser to show that there was no incumbrance - the purchaser required clean title and the special conditions must be seen in the context of the purpose for which they were used, not as a lookback at the 1986 conveyance. The conditions ensured that the purchaser could be assured of vacant possession and clear title from a party entitled to proffer the same - the Appellant could not have given vacant possession before 2006. Mr O’Dwyer ‘s release of his rights ensured payment of the purchase price, a payment essentially to his benefit rather than the Appellant’s. i. The Commissioner erred to the extent that he failed to apply Keegan – the Indenture goes further than Keegan on the facts. j. Finally, for completeness, the land is not registered land, so the 2009 Act’s registration of title provisions don't apply. Keegan also demonstrates that natural love and affection is a sufficient bounty to create the presumption of trust.

Decision

47. The Determination’s findings of fact are not in issue but, for the reasons outlined above, I disagree with the legal conclusions which it draws (or fails to draw) from them and in its assessment of the legal consequences of the Indenture. I answer the questions as follows:-

1. “Did the Commissioner err in holding that the property at issue was not, on foot of the Deed of Indenture dated 1st October 1986, "settled property" for the purpose of the CGT settlement provisions contained in Taxes Consolidation Act, 1997, Chapter 3, Part 19, notwithstanding the judgment in National Bank v. Keegan remains the authority for the proposition that an exclusive or particular right of residence over a portion of unregistered land created an equitable life estate prior to the

introduction of the Land and Conveyancing Law Reform Act, 2009?”

Answer

Yes. Keegan represents the law in this jurisdiction (save where the 2009 Act applies) and the effect of the Indenture was that the Property became settled property within the meaning of the 1882 Act.

2. “Did the Commissioner err in stating that that the Appellant acquired the legal and equitable interest in the property on 1st October 1986 subject to the burden of Mr O’Dwyer's right of residence and income entitlement and on that basis, it was not "settled property "as the essential characteristics of a trust arrangement were absent?" Yes. Mr O’Dwyer retained a lifetime equitable interest in the property in 1986 subject to the burden of Mr O’Dwyer's right of residence and income entitlement - it was settled property within the meaning of the 1882 Act.

48. I will list the matter for final orders at the start of the new term on 29 October at 10.00am.

APPEARANCES

Mr. Tim Dixon BL, instructed by McAlinden & Gallagher Solicitors, for the Appellant. Mr. John Donnelly SC, instructed by the Revenue Solicitor, for the Respondent.