The Supreme Court has allowed Cyril Forbes's appeal over the purchase of garage premises at Inistioge, County Kilkenny, and held that the £180,000 sale contract should be completed.
John and Jeanette Tobin had agreed in 1998 to sell the property to Mr Forbes. The contract required the purchaser to pay any VAT legally due on the transaction. A dispute then developed over whether VAT was payable and on what basis.
The Tobins' solicitors initially maintained that VAT arose because the transaction involved the sale of a business. Mr Forbes's solicitors disputed that, saying the agreement was for land and buildings rather than a going concern. They also pointed out that VAT could potentially arise if qualifying development work had been carried out on the property and repeatedly sought supporting details.
The vendors later accepted that the transaction was not a sale of a business but continued to insist that VAT was payable on the property. Their correspondence referred to advice from accountants and the Revenue Commissioners. However, the Supreme Court found that the underlying information needed to establish the tax liability was not adequately supplied to the purchaser.
Evidence indicated that about £3,000 had been spent concreting an adjoining side yard and that Burmah Castrol had carried out other improvements. Invoices sought by the purchaser could not be found.
The High Court had refused Mr Forbes an order compelling completion of the sale, reasoning that his refusal to pay VAT meant he was not ready and willing to complete. It instead rescinded the agreement and ordered repayment of his £18,000 deposit with interest.
The Supreme Court held that this was mistaken. Mr Forbes had repeatedly indicated that he would pay VAT if it was shown to be legally due. His objection was to paying it without adequate evidence establishing liability.
As the High Court had also found both completion notices defective, and there was no cross-appeal on that point, the Supreme Court allowed the appeal and sent the case back to the High Court to make the orders or inquiries needed to complete the sale.