First I tried
layman -d sabayon && layman -a sabayon
The delete worked but the add got the same error message as below, so I deleted the directory mentioned. Same error!
# rmdir sabayon
# layman -a sabayon
* Running command "/usr/bin/svn co "http://svn.sabayonlinux.org/overlay//" "/usr/local/portage/layman/sabayon""...
svn: Server sent unexpected return value (405 Method Not Allowed) in response to PROPFIND request for '/overlay'
* Failed to add overlay "sabayon".
* Error was: Adding the overlay failed! Possible remains of the opration have NOT been removed and may be left at /usr/local/portage/layman/sabayon. Please remove them manually if required.