Minister sued over Garda station deal

A building company is suing the Minister for the Environment for almost €40 million over alleged failure to honour a contract under which a State agency agreed to swap Harcourt Terrace Garda station in Dublin for 215 affordable housing units in the greater Dublin area.

The action by Durkan New Homes (DNH) of Sandford Road, Ranelagh, against the Minister was transferred to the Commercial Court today by Mr Justice Peter Kelly who observed that Harcourt Terrace Garda station - which is owned by the Office of Public Works - continues to function as a police station. The judge also noted talks and mediation between the sides had failed to resolve the dispute.

The case arises from a contract of December 2007 between DNH and the Affordable Homes Partnership (AHP), a State agency, for the purchase of the Harcourt Terrace station site. It is claimed DNH was to get vacant possession of the 3.540 sq metre site by December 2008 in exchange for providing 215 affordable housing units in the greater Dublin area.

Neil Durkan, a director of DNH, said in an affidavit the sale of the Garda station was not completed by December 2008 as required. At a meeting in March 2009, he was told the building of a new Garda station at Kevin Street had been delayed and the gardai wanted to stay in Harcourt Terrace for another two years, he said.

Mr Durkan said he was agreeable to suggestions the sale should complete and a lease would be entered into. However, no agreement had been reached on lease terms and in May 2010 his company was told the Chief State Solicitor's office would not agree to DNH's proposal that a related new company, Harcourt Terrace Ltd, would acquire the station.

After more correspondence between the sides, DNH served a completion notice in August 2010 requiring that the sale be completed within 28 days. When that notice expired in September 2010, DNH demanded payment of some €40 million due under the contract. After mediation and more correspondence, the legal action was initiated.

Today, Bill Shipsey SC, for DNH, applied to have the case fast-tracked by the Commercial Court and James Doherty, for the Minister, did not object to transfer. Mr Doherty said there had been "an involved history" in the matter and his side was not to be taken as accepting all the plaintiff said on affidavit.

In its claim, DNH said the Minister had established the AHP under legislation to coordinate and promote the delivery of affordable homes up to December 2010. AHP was empowered to purchase and sell land and its functions were assumed by the Minister for the Environment on January 31st last. The Minister is being sued as successor to AHP.

DNH claims, about 2006, AHP had caused the Harcourt Terrace site to be offered in exchange for completed housing units within the greater Dublin area. Cash offers for the site were expressly excluded.

Under a contract of December 7th 2007, it is claimed DNH and AHP contracted for the exchange by December 2008 of the Harcourt Terrace property for affordable housing units. DNH claims it was to provide 215 constructed affordable housing units and to sell those directly to affordable housing applicants. The units were to be sold at a 30 per cent discount to the market value, a discount of some €35,461,000 million.

DNH claims it duly supplied affordable housing units to approved affordable housing applicants at Kiltipper, Marlfield, Deerpark, Rathcoole, Rosse Court, The Belfry and Rath Gael.

It is claimed the December 2007 contract provided for a closing date of December 31st 2008. DNH also claims a special condition of the contract provided, if AHP could not complete the transaction and give vacant possession of the Harcourt Terrace property on the closing date, it would then have to pay €20,000 per week to DNH from January 1st 2009 to February 28th 2009 until vacant possession was provided, with payments rising to €30,000 per week from March 1st 2009 to April 30th 2009. Any delay giving DNH vacant possession after that date would attract payment of €50,000 per week.

When the transaction was not completed on the closing date, DNH, in accordance with the contract, served a completion notice on AHP in August 2010, requiring AHP to complete the sale within 28 days. AHP failed to complete the sale and had also failed to pay the monies due to DNH as a result, it is claimed.

It is claimed some €35,461,000 is now owed under the contract itself while a further €4,187,142 is owed as a result of the additional payments incurred since January 2009.