Multimillionaire property developer Sean Dunne has told the High Court he was "dumbfounded and astounded" when he received a letter in September 2005 claiming there was a binding contract for the sale for €37.5 million of his 50 per cent stake in the Whitewater Shopping Centre in Newbridge, Co Kildare.

Mr Dunne said he received the binding contract claim from businessman Kevin Warren just after he had instructed his solicitor on September 12th, 2005 to call a halt to a deal with Mr Warren for the purchase of Mr Dunne's stake.

He delivered that instruction to his solicitor after receiving a letter from Mr Warren that same day, indicating that several issues remained unresolved regarding the sale of the stake.

Mr Dunne said he had wished to sell his stake as part of raising finance for the purchase of Jury's Hotel and, from May 2005, had been anxious that the deal be pushed on and finalised. His side and Mr Warren's side began discussions in May 2005, signed heads of terms in June 2005 and a deadline of August 11th, 2005 had been extended four times.

When he received a letter on September 12th, 2005 from Mr Warren's side outlining issues which remained unresolved, he "could see no end to us ever concluding the deal," Mr Dunne said. "I instructed my solicitor to call a halt to it." He then got a letter claiming there was a binding contract for sale of his stake and was "dumbfounded and astounded" to read that. That was the first time such a claim was ever put to him, he said.

Mr Dunne said he had never envisaged selling his interest in the Whitewater site separate from the completed shopping centre. "I was selling a completed development, nothing less, and Kevin Warren was buying a completed development, nothing less." The building of the centre continued after September 2005 and it was opened on April 6th last, Mr Dunne said. It was envisaged a certificate of practical completion would be issued later this year.

He said his tax adviser had advised him about possible exposure to tax at 47 per cent income tax instead of 20 per cent capital gains tax and he had put this on the agenda of a meeting with Mr Warren on August 15th, 2005. He agreed this issue was not featured in the agreed heads of terms of June 19th and that Mr Warren was correct in stating it was a new issue. However, the issue relating to his personal tax was no longer an issue after September 13th, 2005, he said. If it was an issue, it was one he was "prepared to live with".

Mr Dunne was giving evidence in his continuing action against Mr Warren over the purported sale of his stake in Whitewater. Mr Dunne, of Merrion Square, Dublin, claims the purported sale to Mr Warren, of Northumberland Road, Dublin is in breach of an agreement that the sale would not be completed until a development agreement had been executed by both parties. Mr Dunne claims it was understood by both parties that the €37.5 million figure was only part of an overall figure to be agreed under a development agreement to be negotiated by the two sides.

In cross examination, Mr Dunne rejected a suggestion by Mr Dermot Gleeson SC, for Mr Warren, that Mr Dunne had never instructed his solicitor to return a €100 deposit sent by Mr Warren regarding the sale. Mr Dunne said he believed his solicitor would tell the court she recalled he gave such an instruction. The cheque "just didn't get sent back", he said.

Mr Dunne also said he was not certain if a company had held the Newbridge property in trust for him from 1999.

The hearing before Ms Justice Mary Finlay Geoghegan continues today.