The Medical Council and a company of developer Johnny Ronan stood to make a tax saving of about €6.2 million between them had they been able to complete the sale of the council’s new landmark headquarters in Dublin in 2007, the Commercial Court has been told.
Due to the then law applicable to the council, it had to instead lease the Kingram House building, off Fitzwilliam Square, from Tanat Ltd at an annual rent of €820,000, the court heard.
Now the council and Tanat are in dispute over whether that rent is reviewable on an upward-only basis or can be cut to some €320,000 per annum.
Tanat was part of Mr Ronan’s portfolio of companies completely separate from the now liquidated Treasury Holdings, which he founded with Richard Barrett, the court heard.
Tanat, whose directors are Mr Ronan and Peter Conlan, claim the council is bound by a 2007 agreement to lease the building, which provided for upward-only rent reviews.
New law
The council contends it has the benefit of a new law introduced in 2009 (Land and Conveyancing Law Reform Act) banning upward-only rent review clauses in leases.
Tanat claims the 2009 law is not retrospective and does not apply.
It also claims the lease arrangement was only entered into to allow the council to move into the building pending it getting new powers allowing it to buy the building for €20 million in the most tax-efficient way or rent it under a longer-term lease.
The case before Mr Justice Iarfhlaith O’Neill continues.
