The High Court has ruled that investors in a County Mayo hotel development validly exercised a put option in January 2014, rejecting the Tax Appeal Commissioner’s conclusion that they had assigned their rights absolutely to Barclays Bank. The notice was an enforceable contract capable of attracting stamp duty under section 31 of the Stamp Duties Consolidation Act 1999.
Mr Justice Butler delivered the judgment on 12 October 2023 in an appeal by Michael Maloney against the Revenue Commissioners. The dispute arose after Revenue assessed the hotel promoters for about €231,673 in stamp duty. The assessment followed the investors’ notice requiring the partnership to buy back their rights in the hotel property.
The investors’ rights arose from a 2005 contract for a 999-year lease, which was never completed and remained “resting in contract”. A 2006 put and call option agreement provided an exit mechanism. In 2013, the investors refinanced a €6 million loan with Barclays and signed a deed providing security over a number of assets, including the option agreement. The deed described the assignment of material contracts as absolute, but the related facility agreement repeatedly required the investors to exercise their option rights in specified circumstances and directed how the resulting proceeds would be used.
The court read the deed and facility agreement together. It found the facility terms showed that the investors retained the right to exercise the put option, and that the bank could require them to do so in certain circumstances. The court therefore rejected the Commissioner’s finding that the January 2014 notice was invalid because of an absolute assignment.
The promoters and investors later completed the return of the property rights under alternative arrangements, on a “without prejudice” basis. The amount paid was about €30,000 less than the sum in an accountant’s letter. Justice Butler said the letter did not amount to the certification of professional fees required by the option agreement. The evidence did not establish how the final amount was agreed.
The court held that the investors held an equitable interest under the uncompleted lease contract. The notice therefore amounted to a contract for the sale of that equitable interest and fell within section 31(1)(a). The judgment did not determine whether the payment also met the conditions for stamp duty under section 31A: the Commissioner’s separate “agreement in aggregate” reasoning had been conceded to be legally wrong, and the court said it was unnecessary to answer that question. The precise result was an answer of “No” to the first question in the case stated; question 2 was answered “Yes” by agreement, and question 3 “No” by agreement. The court did not formally answer question 4.