A company owned by developer Sean Dunne's son, John, is liable for €1.4 million stamp duty on the 2013 sale of the house "Walford" on Shrewsbury Road, Dublin, the Court of Appeal has ruled.
A year ago, the High Court found Yesreb Holdings was liable for €1.4 million on the sale of Walford, which was one time the country’s most expensive house when it was sold for €57.9 million. Yesreb had argued the duty should only be €270,000.
On Wednesday the appeal court upheld the High Court decision.
Sean Dunne bought Walford in 2005/6 for €57.9 million and held it in the Matsack Nominees trust for his now ex-wife Gayle Killilea. The couple never lived there.
In 2013, while it was still in Matsack, it was sold for €14 million to Yesreb Holding, a Cypriot company owned by John Dunne and held for the benefit of John and his three siblings. It was later sold for €14.25 million to another trust, Celtic Trustees, which was set up by financier Dermot Desmond for the benefit of his children.
Yesreb paid €270,000 in stamp duty based on the 2013 purchase price. But in 2016 Revenue assessed the amount payable, inclusive of the €57 million 2005 price, at around €1.4 million. This included a deduction for interest due which was around the same amount already paid by Yesreb.
The primary issue in the proceedings before the Commissioner and the courts was whether the conveyance to Yesreb was a sub-sale of the property.
If it was, the conveyance was sufficiently stamped for €270,000 and if not, it attracted a liability for stamp duty of €1.4 million as well as interest. A secondary issue was whether, even if it was subject to the higher amount, Yesreb was the “accountable person” in respect of any more than the €270,000 which it paid.
After Revenue made a €1.4 million plus interest assessment, Yesreb appealed to a Tax Appeals Commissioner who in 2019 upheld the Revenue's decision.
The Commissioner found that to avail of sub-sale relief, the conveyance must have been “in consequence” of two separate contracts. She concluded that since Sean Dunne had no interest, legal or equitable, in the property at the date of the sub-sale contract, he had no capacity to conclude the contract.
The Commissioner then stated a case to the High Court to determine if she was correct in law at the request of Yesreb.
In June last year, the High Court found the Commissioner was correct.
Yesreb appealed and the Revenue opposed the appeal.
In a judgment on behalf of the three-judge Court of Appeal, Mr Justice Senan Allen said as Sean Dunne did not have a power of sale in March 2013, he cannot have validly contracted for a sub-sale to Yesreb.
As he (Sean Dunne) had no such power, there could be "no legal nexus" between the contract of March 28th, 2013, and the conveyance of the following day, the judge said. Therefore,the conveyance cannot have been in consequence of that contract, he said.
Whatever "notional residual interest", if any, that Mr Dunne might have retained in the 2005 contract, the conveyance to Yesreb required the concurrence of the original 2005 vendors (executors of the estate of the previous owner) and of Ms Killilea at least, if not also of Matsack Nominees.
"That being so, it cannot be said that the same property was immediately conveyed to Yesreb", he said.
He was satisfied the High Court was correct in finding the Commissioner was right to determine that the necessary conditions were not met to avail of sub-sale relief, in accordance with stamp duty legislation in relation to the March 2013 deed of conveyance. Yesreb was therefore unable to avail of sub-sale relief.