Former operator of aquatic centre not entitled to damages - High Court

Company had been pursued to VAT on lease of Abbotstown centre

The National Aquatic Centre in Abbotstown.

The National Aquatic Centre in Abbotstown.


The former operator of the National Aquatic Centre is not entitled to damages over being pursued to pay VAT on the lease for the Abbotstown centre, the Court of Appeal has ruled.

The damages claim by Dublin Waterworld Ltd (DWL) was initiated following a Supreme Court decision in 2010 overturning a €10.2 million arbitrator’s VAT award made against DWL in 2005 to the State company which owns the centre.

Campus Stadium Ireland Development Ltd (CSID) had in 2003 alleged €10.2 million VAT was payable by DWL on its lease interest in the NAC but DWL, then operator of the centre under a 30 year lease of 2003, disputed VAT was payable.


The High Court upheld the arbitrator’s decision but in 2010 the Supreme Court ruled the arbitrator made a fundamental error in interpreting Regulation 19 of the VAT Regulations 1979 so as to find CSID was entitled to claim VAT on the lease

The Supreme Court said, if the capitalised value of the 30 year lease for the NAC was less than the agreed €62 million economic value of the lease, it would be exempt from VAT.

It noted a report obtained by CSID in late 2002 from a professional valuer calculated the capitalised value of the lease at €35 million, meaning the lease would be exempt from VAT.

CSID decided to use other formulae provided for in the Revenue’s VAT regulations in an effort to produce a valuation which would be liable to VAT, the Supreme Court said.

It found the arbitrator “gravely misled” himself on the law in deciding CSID, at its own option, was entitled to rely on the formulae.

DWL had agreed in late 2006 to hand over possession of the NAC to CSID in a final settlement of a lengthy court battle over breaches of the lease by DWL and Limerick businessman, the late Pat Mulcair.

In 2006, the High Court found, in a “tax-driven” deal done ``behind the back’’ of CSID in April 2003, DWL breached the lease by assigning beneficial ownership of it to Mr Mulcair who in turn entered into a management agreement with Dublin Waterworld Management Limited (DWML) for DWML to manage the centre on his behalf.

In High Court proceedings heard over 20 days in 2017, DWL sought damages from the National Sports Campus Development Authority – as the legal successor of CSID – over being pursued for the €10.2 million VAT.


It claimed damages on grounds including alleged malicious abuse of the civil process by CSID. Among various claims, DWL alleged CSID had actual knowledge, including from a valuers report and various emails in late 2002, its claim for VAT was unlawful and contrary to the clear wording of Regulation 19.

CSID denied the claims and DWL appealed to the Court of Appeal (COA) after the High Court dismissed the damages claim.

In a unanimous judgment this week, the three judge COA rejected the appeal.

Delivering the judgment, Ms Justice Mary Irvine said, while the High Court High Court decisions in the perred in law in concluding DWL’s claim must fail in light of the arbitrator and rimary litigation, the High Court’s alternative basis for rejecting DWL’s damages claim “cannot be faulted in any material respect”.

That alternative basis was the High Court finding that DWL had not established CSID did not have “reasonable and probable” cause to issue the VAT proceedings.

The High Court had not taken an impermissible approach to Revenue documents relating to the Revenue’s interpretation and practice concerning Regulation 19, she said.

The High Court made clear it was deciding DWL’s claim “in the round” and that approach lead to its conclusion, for reasons including CSID had received professional advice the lease “was VATable”, that CSID had reasonable and probable cause to issue the proceedings.

It would have been “perverse” had the trial judge reached any other conclusion, regardless of CSID’s knowledge of the dichotomy between the strict wording of Regulation 19 and Revenue practice and/or the possible consequences for its claim by reason of the valuation report, she said