Property developer David Daly and his wife Mary Daly have claimed in the High Court that they suffered significant losses due to changes to tax relief to investments in student accommodation.
The Dalys say they invested after guidelines were issued following enactment of the 1999 Finance Act which contained a provision to address the shortage of student accommodation.
The student accommodation tax relief scheme entitled investors to offset 100 per cent of qualifying expenditure as a year-on-year deduction against all Irish rental income. The excess was then available as a rental loss carried forward against future Irish rental income.
The Dalys claim the enactments and guidelines, made by the then government and the Revenue Commissioners, meant a valid and binding public-private agreement or joint venture enterprise came into existence.
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They also maintain it was expressly represented or implied that if they invested in student accommodation in accordance with the guidelines they would enjoy tax relief which would not be withdrawn, limited or restricted in an arbitrary manner.
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The Dalys made investments in student accommodation projects at the Foster residence in UCD and the Proby residence on Carysfort Avenue, Blackrock, Dublin.
However, the Finance Act was amended in 2006 to limit the use of student accommodation tax relief by certain high-income earners, like the Dalys, with effect from January 1st, 2007. A further restriction on the right to claim such relief came into effect in 2010.
The Dalys say that, as a result of this, they suffered significant loss and damage from the financial year ending December 31st, 2009, onwards, and particularly in 2010.
Following independent tax advice and correspondence with Revenue, they brought High Court proceedings over the matter in 2012 against the Ministers for Finance, Education, and Environment, the Government, the State and Revenue.
They claimed, among other things, that the actions of the defendants constituted an unjust attack upon their constitutional property rights, their rights under the European Convention on Human Rights and under the Charter of Fundamental Freedoms.
The defendants denied the claims.
Over the following years, there was a prolonged period of discovery and other legal exchanges until last March, when the defendants applied to the court to strike out the proceedings on grounds of inordinate and inexcusable delay. The Dalys opposed the application.
In a judgment on Wednesday, Ms Justice Emily Egan refused to dismiss the case.
She said she was not persuaded that the defendants have established anything like the level of prejudice that might assist them in succeeding in the strike-out application.
While she found there was a period of at least three years where there was inordinate and inexcusable delay, the balance of justice clearly favoured the continuation of the proceedings.
The jurisdiction to strike out is not intended to punish parties but to ensure fairness of procedure, she said.
It was appropriate that the proceedings are now governed by a very strict time frame and she adjourned the matter to next week to hear the parties on the appropriate order to ensure an early trial.
