A director of Dunnes Stores, Mrs Margaret Heffernan, has won an appeal against a High Court decision removing her as executrix of the will of her late sister, Ms Therese Dunne, who died in September 1995.

The Supreme Court ruled yesterday there was no justification for Mr Ben Dunne losing confidence in the ability of his sister, Mrs Heffernan, to manage the estate of their late sister. Mrs Heffernan had done nothing wrong in her capacity as executrix, the court stated.

Mr Ben Dunne had initiated the proceedings to have Mrs Heffernan removed as executrix and last April the High Court ruled for Mr Dunne and appointed Mr Garrett Wren to administer the estate. One of the reasons for Mr Dunne initiating proceedings was that the £1 per preference share valuation placed by the executrix on the preference shares held by Ms Therese Dunne might leave him open to a far higher than expected liability to capital gains tax on the earlier disposal of his own preference shares.

The decision was appealed to the Supreme Court which yesterday unanimously found for Mrs Heffernan and reversed the High Court decision.

Ms Therese Dunne's will dealt only with the preference shares in Dunnes Holding Co and not with her other property, which was substantial and was dealt with under the Succession Act's rules of distribution on intestacy. The other property included some properties in England, Jersey, the Isle of Man and Spain.

Mr Dunne had contended that Mrs Heffernan failed in her duties as executrix, particularly in furnishing an affidavit to the Revenue relating to the value of her sister's 265 preference shares in the Dunnes group of companies.

Delivering the Supreme Court judgment yesterday, Mr Justice Lynch said there was no justification for Mr Dunne distrusting Mrs Heffernan or losing faith or confidence in her ability properly and fairly to administer the estate.

Mrs Heffernan was administering the estate with the advice and assistance of well known and reputable solicitors and nothing had been done by her or her solicitors which was in any way improper or justified Mr Dunne's distrust, the judge said.

In any event, if Mr Wren were to be substituted as personal representative, he would find it virtually impossible to value the shares without the assistance of Mrs Heffernan and her solicitors and accountants in relation to giving him confidential information regarding the various companies in the Dunnes Stores enterprise.

Mr Justice Lynch said no impropriety or wrongdoing had been shown in relation to the valuation of these shares.

The fact of the matter was that Mrs Heffernan had done nothing wrong in her capacity as executrix and the mistaken perception of Mr Dunne that she had done wrong could not alter the position that she had not.

"The alleged conflict of interest is flimsy in the extreme," Mr Justice Lynch said. "Any family business can raise similar situations to those arising in this case. It would be a strange state of affairs if a parent or a member of the family was not entitled to entrust the administration of their estate to a child or brother or sister just because of the nature and complications of the business enterprise."

The judge said the preference shares in Dunnes Holding Co on the death of a shareholder, by virtue of the articles of association, became available for purchase at par (£1 each) by the other holders of preference shares in the company.

Ms Therese Dunne had 265 preference shares and these were purchased by the other holders of preference shares - not including Mrs Heffernan - for £265. The Revenue affidavit sworn by Mrs Heffernan included the preference shares of assets of Ms Dunne and plainly and openly put a valuation on them of £265. This was done by her on competent and responsible legal and taxation advice, having regard to the requirements and the effect of the articles of association, the judge said.

Mr Ben Dunne did not suggest that this was done mala fide and indeed accepted that it was done bona fide, he said. Nevertheless, it was the valuation of these preference shares in the Revenue affidavit at £265 which ultimately had given rise to the proceedings.

Mr Justice Lynch said there was a history of antipathy between Mrs Heffernan and Mr Dunne which predated the present proceedings. In earlier proceedings between them and other persons, Mr Dunne had sold his preference shares in the company for some millions of pounds. Mr Dunne was concerned that the Revenue affidavit valuation of Ms Therese Dunne's preference shares of £1 each might result in a liability for capital gains tax on him much in excess of what he had anticipated if the valuation of £1 per share remained, the judge said.

Mr Dunne contended that the shares had a value at the date of death of Ms Dunne of the order of £75,000 per share.

In an affidavit in June 1996, Mr Dunne had stated he was previously owner of 230 preference shares which had been disposed of. He had an indirect liability for capital gains tax on such disposal and as a result of various discussions and advices which he had received in connection with such liability, he was satisfied that the true valuation of the preference shares forming part of the estate was of the order of many millions of pounds.

Mrs Heffernan, in an affidavit, said the disposal by Mr Dunne of his preference shareholding was completed under the terms of a settlement of then extant litigation and occurred long before Ms Therese Dunne's death.

The disposal by Mr Dunne of his preference shares was not in any way related to the compulsory disposal by the estate of the preference shares held by Therese Dunne and consequently the valuation of the preference shares by the estate was of no relevance to Mr Dunne, she said.

Mrs Heffernan said that any liability which Mr Dunne may have in respect of his prior disposal of preference shares should be dealt with by him without any reference to the preference shares held by the estate.

No question of valuation of the preference shares arose as the entitlement of the estate in respect of the preference shares was, in accordance with the articles of association of Dunnes Holding Co, limited to receipt of an amount of £265, she added.