The Court of Appeal has dismissed Michael Maloney’s challenge to a stamp duty assessment of about €243,000 arising from the 2014 buy-back of investors’ interest in Mount Falcon Castle in County Mayo.
Mr Maloney was a member of the Mount Falcon Partnership, which owned the hotel. Under a tax-driven investment scheme established in 2005, investors agreed to acquire a 999-year leasehold interest in the property. The lease was never formally executed, leaving their interest in the hotel resting in contract.
A 2006 option agreement gave the investors a right to require the promoters to buy that interest back. Financing arrangements entered into with Barclays Bank in 2013 included security over the investors’ rights under that option agreement.
The investors exercised their put option in January 2014. The promoters disputed whether they were entitled to do so, arguing that the option rights had previously been assigned absolutely to Barclays. Nevertheless, the parties completed the promoters’ reacquisition of the investors’ interest on February 27, 2014 for €11,583,650.
Revenue subsequently assessed stamp duty of approximately €243,256.65. Mr Maloney argued that no valid written contract attracting stamp duty had arisen because the investors no longer held the option rights when they purported to exercise them.
The Court of Appeal rejected that argument.
Ms Justice Faherty held that the relevant documents had to be read together rather than focusing only on the clause stating that certain rights were assigned “absolutely” to Barclays. Other provisions in the mortgage deed, notice of assignment and facility agreement repeatedly contemplated the investors themselves continuing to exercise the option.
The court therefore agreed with the High Court that the investors had retained that right. Their written exercise of the option created a contract for the sale of their equitable interest in the hotel and attracted stamp duty under section 31(1)(a) of the Stamp Duties Consolidation Act 1999.
The appeal was dismissed and the High Court order affirmed. Revenue was provisionally awarded its appeal costs.