A DEVELOPMENT company has suffered losses of €40 million over the State’s failure to honour an agreement to give it Harcourt Terrace Garda station in Dublin and the former office of the film censor, the Commercial Court was told yesterday. The site was valued at almost €18 million in 2006 and at €3 million last year, the court heard.

Durkan New Homes (DNH) claims it built 215 affordable houses for first time buyers during the economic boom in return for getting possession of the Garda station and the adjoining film censor’s office. The company is suing the Minister for Environment, Heritage and Local Government over failure to go through with this “swap” and claims it is owed about €40 million as a result.

The case opened yesterday before Mr Justice Peter Charleton and was adjourned to today to facilitate talks.

The builders, who proposed a development of commercial offices on the prime Harcourt Terrace site, claim they should have had possession of the property by December 2008 but gardaí only vacated the building in recent months. DNH contends it completed its side of the deal by building 215 affordable homes on a number of sites in Dublin, including Lucan and Tallaght, and selling them at a 30 per cent discount of the market value, about €35.4 million. The houses were part of a scheme set up by the government in 2005 and managed by the Affordable Homes Partnership. It was terminated in 2010 and the partnership’s functions were taken over by the Minister’s department.

DNH says its €40 million claim includes the discount on house sales plus about €5 million in penalties and special damages related to the alleged failure to complete the agreement.

The Minister contends DNH is not entitled to any damages because the contract provided for a penalty clause if the premises was not vacated. If the company is entitled to damages, those should be assessed at the market value of the station site, which in June 2006 was €17.7 million and last November was just €3 million, it is argued.