A HIGH Court trial over a €1.64bn tax demand made by the Revenue Commissioners against US pharmaceutical group Perrigo will not proceed as planned next week due to Covid-19 restrictions.
Perrigo, which has its corporate headquarters in Dublin, wanted the hearing to go ahead despite the lockdown, by imposing strict conditions on the number of people attending the trial each day and subjecting the courtroom to a deep cleaning at the end of each session.
The drug company, listed on the New York Stock Exchange with a $7.1bn (€6.5bn) market capitalisation, has previously said it wanted a speedy resolution to the litigation.
In 2018, the Revenue Commissioners here hit Perrigo with a €1.64bn tax claim related to the drug company's acquisition of Irish pharma firm Elan. Eight months prior to its acquisition by Perrigo, Elan had sold a 50pc in Tysabri to US pharma firm Biogen.
Elan received an upfront cash payment of $3.25bn from Biogen, as well as an ongoing royalty stream.
The upfront proceeds from the sale were counted by Elan as trading income, which attracts a 12.5pc corporation tax rate. But the Revenue Commissioners have argued that the cash proceeds should have been treated as capital gains, taxable at 33pc.
Perrigo's lawyers wrote to solicitors for the Revenue Commissioners on April 2, proposing a protocol that would enable the case to proceed as planned on April 21.
In light of restrictions in place due to the coronavirus pandemic, Perrigo suggested that during each day of the trial, no more than four members of each legal team would be present in court, and that in the event of any member of the legal teams or the judge being affected by the virus, an adjournment could be sought.
But the Revenue Commissioners said their office had been closed due to the pandemic and that it would not be feasible for the case to begin on April 21.
Their lawyers said the proposed protocols from Perrigo were impracticable.
They also said that the solicitor dealing with the case on the Revenue's behalf would be unable to attend the hearing due to health reasons.
Revenue sought an adjournment of the proceedings, which was opposed by Perrigo on the basis that it was premature - and because of the importance of the case to the company and the prejudice its lawyers said the company would suffer if the case was unnecessarily delayed.
The judge presiding over the case, Justice David Barniville, said he consulted with the president of the High Court, and held a brief hearing with the parties to discuss the matter.
However, he has decided not to let the trial commence next week.
He acknowledged that the case involves a “Revenue assessment on a commercial transaction of an enormous amount of money” and that Perrigo sees its resolution as being urgent enough to bypass Government restrictions.
“I cannot agree that the case is so urgent that the Government restrictions should be sidestepped or bypassed, and public health and the health of those involved in the trial potentially put at risk by a physical hearing involving more than 10 people present in the courtroom at any one time,” said the judge.
“While the applicant may well believe that the case is of such urgency and importance, I do not.”
He said he is willing to let the parties apply for a remote hearing when such arrangements are announced.
He also noted that as
the Revenue Commissioners’ offices have been closed, it has not been physically possible for staff to attend the office to deal with four bankers boxes of documents furnished by Perrigo’s solicitors, copied and provided to counsel.
The judge also said he could not say at this stage whether or not the non-jury trial will be suitable for remote hearing.
Perrigo has indicated its opposition to a remote hearing in light of the trial’s predicted length, the volume of the documentation involved and the complexity of the issues raised.
“Unfortunately, I have reached the conclusion that a remote hearing of this case would not be possible, at least on April 21,” said the judge.