Legislator Giurisprudenza & Legislazione
IEHC 217 ECLI:IE:HC:2014:217 Generato dall'IA

High Court allows PRSA transfer to Malta, rejecting Canada Life's residency requirement argument.

Numero d'incarto IEHC 217
Autorità giudiziaria
Giurisdizione Irlanda (IE)
Data della decisione
Esito del giudizio Accolto (Allowed)

Sintesi Legislator

Generato dall'IA

The High Court granted the plaintiff's motion for a mandatory interlocutory injunction, ordering Canada Life to transfer his Personal Retirement Savings Account to Malta. The plaintiff argued that the transfer was for bona fide reasons and did not involve tax evasion, while the defendant contended that residency or employment in the destination country was required. The court decided in favor of the plaintiff by applying a purposive interpretation of the 2003 Regulations, concluding that the statutory instrument intended to facilitate overseas transfers and that the employment connection requirement did not apply to PRSAs.

Regesto Legislator

Generato dall'IA

S.I. No. 716/2003; S.I. No. 716/2003 permits the transfer of a Personal Retirement Savings Account to an overseas fund manager without requiring the beneficial owner to reside or be employed in the destination country.

Parole chiave

Generato dall'IA
Personal Retirement Savings Account overseas transfer regulations mandatory interlocutory injunction purposive interpretation free movement of capital Revenue Commissioners interpretation Act 2005 divieto di accettare decorazioni da uno Stato estero

Disposizioni normative citate

Generato dall'IA
S.I. No. 716/2003
Under rules contained in S.I. No. 716/2003- Occupational Pension Schemes and Personal Retirement Savings Accounts (Overseas
sections 5 and 6 of the Interpretation Act 2005
regard to the provisions of sections 5 and 6 of the Interpretation Act 2005, as outlined above.
s. 770 (1) TCA
benefits offered are "relevant benefits" within the meaning of s. 770 of the Taxes Consolidation Act 1997 ("TCA").
s. 770 of the Taxes Consolidation Act 1997
benefits offered are "relevant benefits" within the meaning of s. 770 of the Taxes Consolidation Act 1997 ("TCA").
Interpretation Act 2005
5 and 6 of the Interpretation Act 2005.
Pensions Act 1990
716/2003 is directly referable to the Pensions Act 1990 and in particular, s.
Taxes Consolidation Act, 1997
"relevant benefits" has the meaning assigned to it in section 770 (1) of the Taxes Consolidation Act, 1997.
Section 124(2) of the Pensions Act 1990
Section 124(2) of the Pensions Act 1990, as inserted by s.
Section 770(1) of the Taxes Consolidation Act 1997
Section 770(1) of the Taxes Consolidation Act 1997 contains the definitions for Chapter 30 and provides that:
section 94 of the Pensions Act, 1990
approval of a product under section 94 of the Pensions Act, 1990, ought to be withdrawn they shall give notice in writing
Generato dall'IA

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Testo completo

Neutral Citation: [2014] IEHC 217

THE HIGH COURT

[2013 No. 6355 P]

BETWEEN

MICHAEL O'SULLIVAN

PLAINTIFF

AND

CANADA LIFE ASSURANCE [IRELAND] LIMITED

DEFENDANT

JUDGMENT of Mr. Justice Ryan delivered on the 1st April, 2014.

1. Introduction

Under rules contained in S.I. No. 716/2003- Occupational Pension Schemes and Personal Retirement Savings Accounts (Overseas

Transfer Payments) Regulations 2003, a Personal Retirement Savings Account contributor may transfer the fund to an overseas

arrangement. This case concerns the meaning and application of the rules.

The plaintiff is the holder of a Personal Retirement Savings Account with the defendant. He opened the PRSA on 1st February, 2013

and the account had a value of €116,069.46 on the 13th February, 2013. On 30th May, 2013 he instructed the defendant to transfer

his PRSA to a fund in Malta. The defendant sought the approval of the Revenue Commissioners who said in a letter dated 7th June

2013 that it was a matter for the PRSA provider to decide whether a transfer to an overseas arrangement was permissible under the

Regulations and that the transfer was for bona fide reasons. The defendant cited the contents of the Revenue letter in its reply of

the 14th June to the plaintiff’s solicitors and said that the transfer was being refused on the grounds that he neither resides nor is

employed in the country to which he is seeking to transfer the fund. The plaintiff issued a motion seeking a mandatory interlocutory

injunction to compel the defendant to make the transfer.

By agreement, the trial of the interlocutory application was treated as the trial of the action. The Revenue Commissioners made

submissions on the interpretation of the transfer rules.

2. The Affidavits and Arguments

Mr. O'Sullivan, the plaintiff, by affidavit dated 8th July, 2013, avers that he has complied with the defendant's application process and

completed a Revenue Declaration. He has bona fide reasons for wanting to transfer the funds, which do not involve wishing to evade

any revenue or tax liabilities in Ireland. The defendant is not entitled to restrict him from moving his monies and its doing so is a

breach of the free movement of capital within the European Union.

Mr. Donal Hennigan, Operations Director of the defendant, in a replying affidavit of the 25th July, says that the defendant has some

issues with the proposed transfer of the plaintiffs PRSA to Momentum Pensions Malta Limited. It is not satisfied that the retirement

benefits offered are "relevant benefits" within the meaning of s. 770 of the Taxes Consolidation Act 1997 ("TCA"). There is also an

issue with the bona fides of the transaction. The defendant also argues that Mr. O'Sullivan is bound by the policy conditions of his

PRSA which include:-

"Only bona fide transfers are acceptable. The use of certain transfer arrangements relating to PRSAs, to circumvent

Revenue rules on the tax treatment of retirement benefits (e.g. transfer payments to the UK and back again to Ireland)

are not permissible. A PRSA contributor who directs the PRSA provider to make a payment to, or transfer assets to, an

arrangement for the provision of retirement benefits outside the State (i.e. an overseas arrangement) under the

provisions of the Occupational Pensions Schemes and Personal Retirement Savings Accounts (Overseas Transfer

Payments) Regulations 2003 (S.I. No. 716 of 2003) must, prior to any transfer, sign a declaration to the effect that the

transfer conforms to the requirements of the regulations and Revenue pension rules, is for bona fide reasons and is not

primarily for the purpose of circumventing pension tax legislation and Revenue rules."

Mr. Hennigan says that under Irish pension law a transfer from a PRSA to an overseas provider can only be made where the overseas

provider can provide "relevant benefits" which is defined under s. 770 (1) of the TCA as "any pension, lump sum, gratuity or other like

benefit -

(a) given or to be given on retirement or on death or in anticipation of retirement or, in connection with past service,

after retirement or death, or

(b) to be given on or in anticipation of or in connection with any change in the nature of the service of the employee in

question".

He says that the defendant informed the plaintiff that there had to be a bona fide reason to allow the transfer to take place and that

he "ought to prove residency and employment status in Malta". Mr. O'Sullivan queried this requirement, at which point the defendant

referred the matter to the Revenue Commissioners seeking clarification as to whether the transfer could proceed. The Revenue

Commissioners replied by letter of 7th June, 2013, stating that the transfer of the plaintiffs scheme overseas was a matter to be

determined by the defendant, having regard to the provisions of the Occupational Pensions Schemes and Personal Retirement Savings

Accounts (Overseas Transfer Payments) Regulations 2003 (S.I. No. 716 of 2003) and the requirement that the transfer be for a bona

fide purpose. The defendant maintains that the plaintiff has not met the requirements of the Regulations of 2003 because he has not

furnished 'further information' in respect of his application to transfer his PRSA to Momentum.

Mr. Hennigan notes that by two circulars issued to all PRSA providers in September 2009, and April 2012, the Revenue Commissioners

warned that where an overseas transfer of a PRSA was made in contravention of the bona fide requirement as outlined by S.I. No.

716/2003, sections 787K(3) and (4) of the TCA would be invoked. In the circumstances, and having regard to the Revenue's power to

withdraw approval for PRSA products if there is a question as to the bona fides of a transaction, the defendant has no option but to

question the nature of the transfer proposed by the plaintiff and ensure that reasonable enquiries are made to ensure it is compliant

with the provisions of S.I. No. 716/2003. His argues that the PRSA provider may require any individual to provide employment and

residency details in the State to which he proposes making the transfer. This is a mechanism that scheme providers such as the

defendant can employ to verify that the proposed transfer meets the Revenue requirement of a bona fide transaction.

Ms Ursula Geraghty, solicitor for the plaintiff, by replying affidavit dated 29th July, 2013, rebuts this argument. She says that there is

no statutory basis where provision of details in respect of residency or employment is a prerequisite for arranging an overseas transfer

of a PRSA scheme. The plaintiff chose not to proceed with the transfer of his fund to Cyprus because of an unstable economic

climate. He favours moving the fund to Malta for that same reason. He completed the overseas transfer declaration form as required

and the defendant has not outlined any legislative basis under the TCA for their continued refusal to allow the transfer.

Ms. Geraghty argues that the defendant has based its refusal on the fact that the plaintiff is not resident and employed in Malta and

not on any deficiency of information about the proposed recipient of the fund. Although the defendant requested clarifying information

in relation to the suitability of the Maltese scheme on the 23rd July, 2013, it had refused the plaintiff's request on the grounds of

residency and employment on the 14th June, 2013. Momentum has provided the necessary "relevant benefits" documentation to the

defendant and the plaintiff has complied with the requirements of S.I. No. 716/2003. Mr. O'Sullivan is a chartered accountant by

profession and is therefore aware of his tax obligations and the reasons stated by the plaintiff in his declaration to Revenue show it to

be a bona fide transaction. Ms. Geraghty believes that the defendant is confusing the Revenue Commissioners' position in relation to

occupational pension schemes, which require certain residency and employment criteria to be met, with the requirements relating to

the transfer of PRSA funds, in which residency and employment status are not prerequisites. The Life Assurance industry in Ireland

cannot impose any unlawful restrictions on parties wishing to transfer their PRSAs to overseas schemes.

Mr. Hennigan, in a supplemental replying affidavit of the 13th December, 2013, states that the plaintiff, by letter, revoked his

instruction to transfer the PRSA to Momentum and instead instructed the defendant to transfer the PRSA to another scheme provider,

Centaurus Retirement Benefit Scheme, also based in Malta, and submitted a further Revenue declaration form. The defendant sought

information directly from Centaurus who replied by letter of the 6th December, 2013, on foot of which the defendant refused to make

the transfer. It did so on the basis that it is not satisfied that Centaurus will provide "relevant benefits" pursuant to s. 770 of the

TCA, which requires service as the employee of an employer in all cases. The defendant is not satisfied that the additional Revenue

approval condition has been met by Centaurus and therefore allowing the transfer could breach Part 30 of the TCA. Mr. Hennigan

does not imply any mala fides on the part of the plaintiff- his concern is only with compliance with Revenue law and procedures. The

Revenue has not issued any guidance as to what constitutes a bona fide transfer so the defendant's position has been to act as an

agent of the Revenue Commissioners in deciding whether a transfer abroad is permissible.

Mr Clive Slattery, Pension Consultant and former Principal Officer with the Revenue Commissioners, in an affidavit supporting the

plaintiffs application, avers that he has reviewed the correspondence of the 29th November, 2013, from the defendant and the reply

of the 6th December, 2013, from Centautus and based his report to the Court on his findings. He was asked to establish whether the

Centaurus scheme provided "relevant benefits" and reached the following conclusions:

(i) When a scheme member reaches normal retirement age (or ill-health results in early retirement), he becomes entitled

to an annual annuity for the remainder of his life.

(ii) Part, or all, of that annuity may be commuted for a lump sum. (Amount limited by Malta Financial Services Authority).

(iii) On the death of the member, benefits are paid to the member's estate.

Mr. Slattery addresses the background to the "relevant benefits" requirement in S.I. No. 716/2003. He was involved in drafting the

statutory instrument, the purpose of which was to provide an appropriate framework within which overseas transfers would be

possible. The position prior to S.I. No. 716/2003 was that transfers could only be made to a country where a member was employed.

This requirement was deleted insofar as it related to an employment in another EU Member State. Mr. Slattery says that where a

member desires an overseas transfer to another EU member state, there is no requirement to be resident or employed there. The

inclusion of "relevant benefits" was inserted to ensure that pension transfers from Ireland could only be made to another pension

arrangement. Transferring an Irish pension product to an overseas saving product for example is not permissible because the potential

benefits would differ.

Mr. Slattery states that s. 770 of the TCA is very clear in its meaning - relevant benefits are any pension, lump sum, gratuity or

benefit paid on either death or retirement. The Centaurus Scheme provides benefits payable on either death or retirement of the

member; therefore the requirement to provide "relevant benefits" has been met.

3. The Revenue Commissioners

Because the defendant was making the case that it was unable to accede to the plaintiff’s instruction or request to transfer his PRSA

because of Revenue requirements as to bona fides and the interpretation of S.I. No. 716/2003, at my suggestion the Revenue

Commissioners were invited to participate in the argument as amicus curiae and they agreed to do so. They made helpful written

observations which were amplified by counsel appearing for the Revenue, Ms. Grainne Clohessy S.C. The Revenue submitted that s.

770 TCA is a taxing statute and should be interpreted strictly, in accordance with Inspector of Taxes v. Kiernan [1981] I.R. 117;

McGrath v. McDermott [1988] I.R. 258 and Kearns v. Dilleen [1997] 3 I.R. 287. In Chapter 1 TCA, the terms "occupational pension

schemes" and "retirement benefits scheme" are used interchangeably. Chapter 1 predates the introduction of PRSAs and so they are

legislated for in Chapter 2A of Part 30, TCA, inserted by s. 4(1)(d)(v) of the Pensions (Amendment) Act 2002.

The definition of "relevant benefits" is wide ranging and covers (with certain exceptions) any type of financial benefit given in

connection with the termination of an employee's service with an employer. It includes the terms "employee", "service" and

"employment". The definition of "service" also extends to other terms to include "retirement". Section 772(2) of the TCA provides:-

"The conditions referred to in subsection (1)(a) are-

(a) that the scheme is bona fide established for the sole purpose of providing relevant benefits in respect of service as an

employee.....

(b) that the scheme is recognised by the employer and employees to whom it relates.....

…

(d) that the employer is a contributor to the scheme."

It is therefore Revenue's position that, in the context of Chapter 1 of Part 30 TCA, which deals solely with occupational pension

schemes, the term "relevant benefits" does have an employer/employee service requirement.

However, in this case the Court is being asked to interpret the term "relevant benefits" as contained in a non-taxing legislative

measure and in a different context. While there is a requirement to interpret tax legislation strictly, there is scope for a more flexible

approach where a regulation is not a tax regulation, such as occurs in this case. The Court, in the context of s. 770 TCA, can

interpret "relevant benefits" in a way that reflects a more flexible approach than that given to taxing statutes. Such an interpretation

is permitted by ss. 5 and 6 of the Interpretation Act 2005. It can be given a meaning which is not dependent on there being an

employer I employee relationship in place. S.I. No. 716/2003 is directly referable to the Pensions Act 1990 and in particular, s. 194

outlines the procedure for PRSA transfers to overseas arrangements. Therefore to construe it as being only applicable in the context

of an employer/employee relationship would be to exclude personal retirement savings accounts entered into by self-employed

persons from the scope of the Regulations of 2003.

The bona fide condition was introduced in 2009 in a bid to stop PRSAs being used to facilitate 'artificial' transfers of occupational

pension schemes outside of Ireland and back again. In 2012 the Revenue Commissioners were advised by the pensions industry that

many requests for transfer of pension schemes overseas were in response to advertising by international scheme providers in Ireland.

These schemes sometimes work by way of a "dual transfer" - an individual's pension fund is transferred to an overseas arrangement

which meets the requirements of S.I. No. 716/2003, whereby it is then immediately transferred to another jurisdiction to allow for

easier access to the funds.

The increase in overseas transfers raised concerns concerning the potential flight of pension funds out of the country, the risk to the

pension holders and an undermining of the primary purpose of tax relief for pensions, i.e., to encourage individuals to save for

retirement. This supposes that pension funds are 'locked away' and not accessible until retirement. The Revenue, as part of the

reforms under the 2012 circular, introduced the requirement to include a signed declaration that the transfer being sought was bona

fides. It is the Revenue Commissioner's position that the inclusion of this declaration by the PRSA holder is not conclusive evidence of

bona fides. The PRSA provider can still make further enquiries to assess the validity of the proposed transfer and is under no

obligation to "blindly accept a signed declaration" as the only evidence.

4. The Regulations and Legislation

"S.I. No. 716/2003- Occupational Pensions Schemes and Personal Retirement Savings Accounts (Overseas Transfer Payments)

Regulations, 2003.

Citation.

1. These Regulations may be cited as the Occupational Pension Schemes and Personal Retirement Savings Accounts

(Overseas Transfer Payments) Regulations, 2003.

Definitions.

2. In these Regulations -

"Act" means the Pensions Act, 1990 ;

"overseas arrangement" means an arrangement for the provision of retirement benefits established outside the State;

"relevant benefits" has the meaning assigned to it in section 770 (1) of the Taxes Consolidation Act, 1997.

Overseas transfers.

3. (a) A member of a scheme who is entitled to a transfer payment under section 34 (2) of the Act, may direct the

trustees of the scheme to apply the transfer payment in the making of a payment to an overseas arrangement, or

(b) a PRSA contributor who is entitled to transfer his PRSA assets under section 124 (2) of the Act may direct the PRSA

provider to transfer those assets to an overseas arrangement, provided that:

(i) the trustees or PRSA provider have satisfied themselves that the retirement benefits to be provided under the

overseas arrangement are relevant benefits by obtaining written confirmation to that effect from the trustees,

custodians managers or administrators of an overseas arrangement to which the transfer is to be made, and

(ii) the trustees or PRSA provider have satisfied themselves that the overseas arrangement has been approved by

an appropriate regulatory authority for the country concerned, and (iii) the trustees or PRSA provider have received

from the member of the scheme or the PRSA contributor such information in such form as may for the time being be

approved by the Pensions Board."

Section 124(2) of the Pensions Act 1990, as inserted by s. 3 of the Pensions (Amendment) Act 2002, provides:-

"Transfers of the kind referred to in subsection (1) may be made, in accordance with such conditions as may be

prescribed, to any arrangement for the provision of retirement benefits established outside the State to the same extend

that transfers are permitted from a scheme."

Section 770(1) of the Taxes Consolidation Act 1997 contains the definitions for Chapter 30 and provides that:

"relevant benefits" means any pension, lump sum, gratuity or other like benefit-

(a) given or to be given on retirement or on death or in anticipation of retirement or, in connection with past

service, after retirement or death, or

(b) to be given on or in anticipation of or in connection with any change in the nature of the service of the

employee in question,

but does not include any benefit which is to be afforded solely by reason of the death or disability of a person resulting

from an accident arising out of or in the course of his or her office or employment and for no other reason;

"service" means service as an employee of the employer in question and other expressions, including "retirement", shall be

construed accordingly;

Section 770(2) provides:

"Any reference in this Chapter to the provision of relevant benefits, or of a pension, for employees of an employer includes

a reference to the provision of those benefits or that pension by means of a contract between the administrator or the

employer and a third person."

See also s. 772(2) of the TCA, quoted above.

5. Revenue Circulars

The Revenue Commissioners issued a circular dated 11th September, 2009, in response to concerns that PRSA schemes were being

used to circumvent Revenue rules on tax liabilities for retirement benefits. Specific areas of interest were:-

(i) Payments transferred between the UK and Ireland;

(ii) Accessing retirement benefits before retirement;

(iii) Using schemes for investments prohibited in Ireland; and

(iv) Provision of ARF options to individuals who would not qualify under Irish legislation.

The Revenue introduced a new 'approval condition' to be applied to all PRSA products. The condition was imposed pursuant to

s.787K(2) TCA and stated that PRSA products the subject of transfer arrangements under S.I. No. 716/2003 would only be facilitated

if they were bona fide.

Any transfer which was intended to circumvent Part 30 of the TCA would be a contravention of Revenue rules. The Revenue proposed

that if they became aware that a non bona fide transfer had been made they would invoke the new provisions of the TCA and the

PRSA would be deemed to have contravened the approval condition until the contrary was demonstrated to the satisfaction of the

Revenue Commissioners.

A second Revenue circular dated 19th April, 2012, expressed the same concerns as the first circular. It was made clear that a

transfer payment to an overseas provider, the purpose of which was to circumvent Part 30 of the TCA, would contravene the

approval condition. For extra security, under the 2012 circular. Revenue applied another 'additional approval condition' to all existing

and future schemes.

The additional approval condition stated:-

"A member of an occupational pensions scheme or a PRSA contributor who directs the trustees of the scheme or the PRSA

provider to make a payment to, or transfer assets to, an arrangement for the provision of retirement benefits outside the

State (i.e. an overseas arrangement) under the provisions of the Occupational Pensions Scheme and Personal Retirement

Savings Accounts (Overseas Transfer Payments) Regulations 2003 (S.I. No. 716 of 2003) shall, prior to any transfer, sign

a declaration, in such form to be determined by the Revenue Commissioners, to the effect that the transfer conforms to

the requirements of the regulations and Revenue pension rules, is for bona fide reasons and is not primarily for the

purpose of circumventing pension tax legislation and Revenue rules."

Pension scheme trustees were required to sign and return a declaration form to Revenue in respect of any overseas transfer. If a

transfer occurred in breach of the conditions, the Revenue proposed invoking ss. 772(5) and s. 787K (3) & (4) of the TCA. These

provisions are as follows:

Section 772(5):-

"Where in the opinion of the Revenue Commissioners the facts concerning any scheme or its administration cease to

warrant the continuance of their approval of the scheme, they may at any time, by notice in writing to the administrator,

withdraw their approval on such grounds, and from such date, as may be specified in the notice."

Section 787K(3):-

"Where, having regard to the provisions of this Chapter, the Revenue Commissioners are, at any time, of the opinion that

approval of a product under section 94 of the Pensions Act, 1990, ought to be withdrawn they shall give notice in writing

to the Pensions Board of that opinion and such a notice shall specify the grounds on which they formed that opinion."

Section 787K (4):-

"Where approval of a product is withdrawn pursuant to section 97 of the Pensions Act, 1990 , there shall be made such

assessments or amendment of assessments as may be appropriate for the purpose of withdrawing any relief given under

this Chapter consequent on the grant of the approval.

6. Discussion

The plaintiffs request to transfer his fund to an overseas arrangement in another EU state is governed by regulations in S.I. No.

716/2003, which also applies to occupational pensions. Two conditions or provisos that are specified in the regulations have to be

considered in this case. They are (A) a requirement that the transaction should be bona fide and (B) that the receiving fund provides

"relevant benefits" as defined in section 770 (1) of the Taxes Consolidation Act 1997. The defendant's argument was that it did not

want to be in breach of the regulations or of the relevant Revenue circulars, which latter particularly applied to condition (A).

It is of course true that if the defendant can put up an obstacle to transferring the pension fund to Malta, the plaintiff will be obliged

to keep his money in Ireland so the defendant company has an interest in opposing what the client wants to do.

On the issue of bona fides, the question is whether the pension provider has to perform an evaluation of the reasons for the transfer

of funds and, if so, what is the nature or limit of the enquiry? The Revenue observed that submission of the signed declaration form to

illustrate that the transfer is bona fide is not necessarily proof of its validity. It is open to the PRSA provider to make further enquiries

to assess the lawfulness of a proposed transfer and it is under no obligation to accept a signed declaration as the only evidence of

legitimacy.

The Revenue Commissioners state that it is incumbent upon the PRSA provider to use its best endeavours to ensure that in respect of

a PRSA contributor, the signed declaration is what it appears to be. If there are any circumstances of which the PRSA provider is

aware, or if the declaration does not make sense because of some other information the PRSA provider has, (i.e., information on file

about certain schemes), then the PRSA cannot accept a signed declaration and ignore the other information or evidence that it has

or is aware of.

This does not arise here. The defendant has made no claim that it is aware of some other information which would preclude the

plaintiff’s application. Obviously, the plaintiff has formally complied with the Revenue circular. The question is whether the defendant

has to evaluate the information the plaintiff provided on the form that he submitted. My answer is no- the company does not have to

investigate the circumstances. A fund manager in the position of Canada Life in this case is not obliged to conduct an independent

examination and evaluation of the motives of the fund owner. There was no reason for the defendant to suspect that the plaintiff

intended any breach of the Regulations or of his obligations under taxation legislation. The mere fact that he wanted to transfer this

PRSA to another EU member state was not an indicator of any suspicious circumstance.

I do not think that the defendant is under an obligation to engage in an investigation of the motives of the plaintiff. Provided there is

nothing in the facts of the case as presented to the company to give rise to suspicion as to the bona fides of the transaction, the

defendant company is free to implement the wishes of the owner of the fund. Having said that, I am not sure that it is possible to lay

down a general rule. Everything depends on the circumstances of the particular case. It is sufficient to say that in this case there

appears to be no basis for questioning the motives of the applicant and that his declaration in the approved form is therefore

sufficient. The defendant company does not have any reason to be uneasy and is not required to verify the factual circumstances

behind the application or to make some general exploration of the applicant's motives. This condition is not accordingly a legitimate

ground of refusal.

The central issue in the case concerns condition (B). As is clear from the recitation of the dealings between the parties described

above, the defendant maintains that the plaintiff cannot transfer the fund because he is not resident and employed in the country

where the receiving body is located.

In respect of the Centaurus application, the defendant received a Revenue declaration form and a letter from Centaurus confirming

that (1) the plaintiff is self​ employed tax accountant; (2) the scheme is operated as a defined contribution retirement benefit scheme

within the provisions of the Maltese Special Funds (Regulation) Act and is registered as a personal retirement scheme with the MFSA;

(3) the benefits are payable only on retirement or death; (4) the relevant benefits of the scheme are as follows:

(i) Benefits are to be taken between ages 50 and 70;

(ii) Maximum lump sum is 30%;

(iii) 70% of fund has to be used to provide income for life;

(iv) Benefits are payable to spouse on death of member;

(v) No loan can be secured against the fund; and

(vi) The scheme is regulated by MFSA and audited by KPMG.

The plaintiff relies on these features that are typical of a retirement scheme to support his argument and the affidavit of Mr. Slattery

is confirmatory of that point.

It is to be remembered that the transfer regulations apply to occupational pensions as well as PRSAs. The proviso refers to "relevant

benefits'' as defined in section 770 (1) of the TCA. PRSAs were not covered by that legislation and the definition in question did not

have them in contemplation because they were not invented at the time. The Chapter of the Act was dealing with benefits in

pensions on retirement from employment. The expression as defined applies to an occupational pension. This is a point made by

Canada Life with which the Revenue Commissioners are in agreement as a matter of interpretation of the statutory definition. The

provisions of s.772 TCA afford confirmation of the connection with employment.

It follows if this analysis is correct that the proviso in the Regulations of 2003 applying to both occupational pensions and personal

retirement savings accounts requires that the benefit should be occupational in nature. However, PRSAs are not related to

employment; they can be taken out regardless of employment status. Many, if not most of them, are not connected with employment

and so cannot comply with this definition. Construing the measure in this way would mean that regulations, whose title and purpose is

to permit the transfer of PRSAs as well as occupational pensions, contain a condition that by the nature of PRSAs they, or many of

them, cannot fulfil. It would also mean that transferrable PRSAs were required to fulfil a condition that they did not have to satisfy at

home.

Case law makes clear that taxing statutes must be construed strictly. Another principle of interpretation is that statutory words must

be given their plain meaning and a court cannot rewrite legislation so as to mean something different from what it says. The same

rules apply to statutory instruments including the strict rule as to interpretation in the case of regulations dealing with tax. The

statutory instrument in this case is not a taxing measure and neither is the definition of relevant benefits in s. 770(1) TCA in its

application to transferring PRSAs.

A court may depart from the literal construction of an enactment and adopt in its place a teleological or purposive approach, where

that more faithfully reflects the true legislative intention gathered from the measure as a whole. Yet another principle that is used in

construing legislation is that a meaning that gives effect to the provision is preferred to one that renders it inoperative.

Important rules of statutory interpretation and construction are now available to the Court in sections 5 and 6 of the Interpretation

Act 2005 which are as follows:-

5(1). "In construing a provision of any Act (other than a provision that relates to the imposition of a penal or other

sanction) -

(a) that is obscure or ambiguous, or

(b) that on a literal interpretation would be absurd or would fail to reflect the plain intention of-

(i) in the case of an Act to which paragraph (a) of the definition of "Act" in section 2 (1) relates, the

Oireachtas, or

(ii) in the case of an Act to which paragraph (b) of that definition relates, the parliament concerned,

the provision shall be given a construction that reflects the plain intention of the Oireachtas or parliament concerned, as

the case may be, where that intention can be ascertained from the Act as a whole.

(2) In construing a provision of a statutory instrument (other than a provision that relates to the imposition of a penal or

other sanction) -

(a) that is obscure or ambiguous, or

(b) that on a literal interpretation would be absurd or would fail to reflect the plain intention of the instrument as a

whole in the context of the enactment (including the Act) under which it was made,

the provision shall be given a construction that reflects the plain intention of the maker of the instrument where that

intention can be ascertained from the instrument as a whole in the context of that enactment.

6. In construing a provision of any Act or statutory instrument, a court may make allowances for any changes in the law,

social conditions, technology, the meaning of words used in that Act or statutory instrument and other relevant matters,

which have occurred since the date of the passing of that Act or the making of that statutory instrument, but only in so

far as its text, purpose and context permit."

Is it therefore legitimate to interpret S.I. No. 716/2003 as referring to PRSAs without an employment component? The plaintiff submits

that S.I. No. 716/2003 is clearly intended to apply to PRSAs and a proper and reasonable interpretation of its terms is that there

cannot be a requirement of an employment connection. His case, and the Revenue argument agrees, is that applying the meaning

proposed by Canada Life results in the opposite of what the statutory instrument manifestly intends to do, namely, to enable the

owner of a PRSA to transfer it to an overseas fund manager. The Revenue agree that that is possible, notwithstanding the usual

strict approach to interpreting tax legislation because this is a permissive statutory instrument and not tax legislation and also having

regard to the provisions of sections 5 and 6 of the Interpretation Act 2005, as outlined above.

The concept of relevant benefits in s.770 (1) TCA and neighbouring sections is associated with employment. That is to be expected.

Chapter 30 of the TCA 1997, deals with occupational pensions. But even on a strict literal interpretation, it appears that the definition

of relevant benefits is disjunctive and the first phrase, referring to "any pension, lump sum, gratuity or other like benefit" that is

"given or to be given on retirement or on death or in anticipation of retirement" taken alone and without considering its meaning

amplified by context and purpose, does not confine the benefits to employment. Moreover, the employment connection is expressly

stated in the provisions where that is required so it would appear that the drafters did not consider that the definition necessarily

included that relationship.

A PRSA does not require that the beneficial owner should have an employment connection with the fund manager, unlike an

occupational pension scheme. It makes sense for there to be a proviso concerning an employment connection in the case of an

occupational pension scheme but not for a PRSA and the intention of the statutory instrument seems to me to be clear, that is, to

facilitate the transfer of each of two kinds of fund to an overseas manager. I do not think that the proviso as to relevant benefits

was ever intended to cover personal retirement savings accounts because such funds- most of them perhaps and certainly many of

them -would not, or could not, comply.

It seems to me that the purpose of S.I. No. 716/2003 is clear and should not be frustrated by a narrow or literal reading. Although the

connection with employment is clear in the case of an occupational pension in the context of Chapter 30 of the TCA, it does not

follow that the same requirement applies to PRSAs. It would defeat the intention of the measure to adopt that interpretation. It would

actually fail to make any actual distinction between the two kinds of fund. The Court has to approach the matter on the basis that

the intention of the Regulations of 2003 should, if possible, be effected by applying rules of interpretation and construction.

It seems to me that S.I. No. 716/2003 can legitimately and should be given a purposive interpretation so as to permit the transfer

sought by the plaintiff. The Regulations are intended to allow people like the plaintiff to do what he wants to do. The Interpretation

Act, 2005 permits an approach in accordance with the true intention of the legislation and the regulations.

7. Conclusion

My conclusion, accordingly, is that the transfer regulations do not require that the plaintiff be resident or employed in the destination

country in order to move his fund.