The family members of drug dealer and underworld figure Carl Williams will lose their home after an unsuccessful appeal in the Victorian Supreme Court to keep it.

The court had previously ordered that the property be sold by the Australian Tax Office in order to pay back large debts owed by Carl Williams’s father, George Williams.

Carl Williams struck a deal with police to provide information about gangland crimes in Melbourne, if a number of conditions were met, including a reduction in his father’s jail sentence and the settlement of his $740,000 tax debt.

But Carl Williams died after he was bashed in prison in 2010.

George Williams eventually agreed to pay $576,000 as part of a court settlement, but he died of a heart attack in 2016 and the debt remained.

The family home on Primrose Street in Essendon is estimated to be worth more than $1 million, and George Williams left it to his grand-daughter Dhakota Williams who lives there with her mother and Carl Williams’ former wife, Roberta.

In March the Supreme Court ruled that Roberta Williams had no claim to the house and made orders for it to be sold.

Justice Joanne Cameron said there was a “miscommunication” between police, the Williams family and the ATO during their dealings.

Roberta Williams appealed the court’s earlier decision on five counts, including that the original judge made legal errors.

Justice Cameron found there was no error and no other reason to overturn the original judgement.

Roberta and her daughter were in the courtroom for the decision.

-ABC