The State body responsible for Dublin's National Aquatic Centre knew from 2002 "what the law required it to do" in relation to the treatment of a €10 million VAT bill, but "Robert-Frost-like" chose to do something else, a judgment by Mr Justice Max Barrett in the High Court has concluded.
The State is being sued for €30 million by the former operator of the swimming pool, Dublin Waterworld Ltd. It claims that Campus Stadium Ireland Development (CSID), the State company set up to oversee the centre, "maliciously" prosecuted it in order to oust it from running the centre and to try to destroy its directors by making the company pay a €10 million VAT bill that was not due.
CSID has since been disbanded by the State and replaced by the National Sports Campus Development Authority, which is the subject of the legal action by Dublin Waterworld Ltd.
In a judgment published last Friday, Mr Justice Barrett concluded after reviewing an affidavit by Barry O’Brien, the chief executive of the authority, that the “unavoidable truth” was that the State body had acted “Robert Frost-like” when it reached “two diverging roads and was told by PwC [PricewaterhouseCoopers, its tax advisers] that, while it was required by VAT law to travel one road, “accepted practice” indicated that there was another road that “the defendant should take”.
“These are serious contentions for the authority to make regarding PwC. In effect, the authority contends that regulated professionals encouraged a semi-State body to engage in behaviour that those advisers had advised was contrary to what the law requires.”
Mr Justice Barrett noted that PwC was not a party to the proceedings and had had no “opportunity to respond” so “the court does not consider it appropriate to reach any conclusions or make any comment as to PwC’s actions”.
“The unavoidable truth in these proceedings is that, on and from 27th November 2002, the authority knew what the law required it to do,” he said. “One does not need top-flight advisers to know that one ought generally to seek to comply with the law, even if an alternative course of action is pressed or there are others who do not attempt to so comply.
“The man in the street, the woman on the Luas, the speeding driver on the M50 motorway, even the rowdy punter outside his local pub: they all know that one should at least strive to act in accordance with the law, that risks arise if one does not and that unpleasant consequences may follow such failure. The decision-makers in the authority knew this too.”
“The law must not be violated ‘even by the king’ or, it might be added, by a semi-State body,” the judge concluded.
After reviewing the case, he had decided that Dublin Waterworld did not have to put up security of costs before being allowed to sue the State, but it should disclose who was funding it.
Kerry businessman John Moriarty, a director of Dublin Waterworld, said yesterday that he was happy to tell the court this. "I wonder how much more of taxpayers' money is going to be wasted by this quango on ridiculous litigation," Mr Moriarty added. "Members of the authority and the former directors of CSID need to reflect on their actions over many years."
The decision to wrongly pursue Dublin Waterworld for the VAT bill has been criticised by the Supreme Court, the Dáil Committee of Public Accounts, and the Comptroller and Auditor General.
