The High Court has refused to set aside a €10.25 million VAT payment which an arbitrator had ruled was due by Dublin Waterworld Ltd to Campus and Stadium Ireland Development Ltd on a lease of the National Aquatic Centre.
Mr Justice Paul Gilligan yesterday said that recognised VAT expert and arbitrator Dermot O'Brien had on July 1st ruled that the VAT demand by Campus had been correctly charged. Campus had sought an order to enforce the arbitration against Dublin Waterworld (DWL) which had contested the award.
DWL had sought to set aside the arbitrator's order on the basis that he had misconducted himself.
In a reserved judgment, Mr Justice Gilligan held that no basis had been laid out to set aside the award of the arbitrator. The dispute between the parties relating to VAT payment on a lease between DWL and Campus had been referred to arbitration by Mr Justice Peter Kelly in the Commercial Court.
Mr Justice Gilligan said it followed from a Supreme Court ruling that the High Court had no statutory jurisdiction to set aside an award of an arbitrator in the absence of finding that the arbitrator had misconducted himself or the proceedings.
He said the arbitration had been conducted by a review of documents furnished by both parties and by an oral hearing held at the office of the arbitrator on June 28th.
It had been accepted by both parties that the lease was one which would be subject to VAT at 13.5 per cent on its capitalised value in accordance with economic value test provisions. The economic value of the lease was the amount of money, excluding VAT, incurred by the landlord in acquiring and developing the property, and both sides had accepted that the economic value was a figure of about €62 million.
Mr Justice Gilligan said that for the lease of the National Aquatic Centre to be subject to VAT, the capitalised value of the lease would have to equal or exceed the economic value.
Campus had declined to rely on a valuation placing the open market price of the interest being disposed of at €35 million, but instead had preferred to use one of the prescribed formulae to multiply the unencumbered rent figure by 30 years giving a capitalised value of the lease of €75,960,000 - a value in excess of the economic value of the lease.
Mr Justice Gilligan said that to interfere with the award of Mr O'Brien, the court would have to be satisfied that the award showed an error of law or that Mr O'Brien had misconducted himself. The judge concluded that no such basis had been laid.