Courts

Hotel owner claims it could lose €2.1m for accommodating IP applicants as current operator will not surrender vacant possession

Owner of Grand Hotel in Wicklow town brings High Court proceedings against operator, seeking orders including that a lease agreement has ended

The Grand Hotel in Wicklow town. Photograph: Google Maps
Mon Oct 07 2024 - 20:19

The owner of a Wicklow hotel claims it could lose up to €2.1 million for accommodating international protection applicants because its current operator is refusing to surrender vacant possession.

MBE Investments Ltd has brought High Court proceedings against Vesta Hotels Ltd, which currently operates the Grand Hotel, Marlton Road, in Wicklow town.

In September 2017, MBE leased it to Vesta, which has a registered address at Fumbally Court, Dublin 8. The hotel had 35 bedrooms and two conference rooms along with a kitchen, nightclub and car park.

MBE is seeking orders and declarations including that a lease agreement ended last August 19th and that Vesta has been occupying the property as a trespasser since October 1st. It also seeks damages for losses suffered arising from the alleged trespass and breach of contract.

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MBE director Seán Tobin said in an affidavit that two years after entering into the lease its terms were varied under which it was noted that, since December 2018, the hotel had been used by Vesta to provide services to the Department of Justice Reception and Integration Agency.

The lease was further extended for another two years in August 2022. Mr Tobin said Vesta also signed a deed of renunciation relinquishing any rights to a long-term lease.

In mid-2023, MBE asked Vesta what it wished to do when the lease ended the following August. At a meeting in October 2023, Mr Tobin said, Vesta director Adrian Shanagher “indicated that he had no interest in extending the lease”.

Last May, MBE wrote to Vesta stating the lease would expire in August and asking that the property be handed over but there was no substantive response, Mr Tobin said.

In the meantime, MBE was in contact with a firm running International Protection Accommodation Services (IPAS) centres and, following discussions, MBE reached agreement in principle last June with Templegrade ULC. Mr Tobin said Templegrade companies currently operate six IPAS centres housing 781 residents.

Templegrade has agreed with the Department of Integration to enter into a contract for the hotel once Vesta gives up vacation possession, he said.

Mr Tobin believes Templegrade intends to operate a model similar to its other IPAS centres in the Grand Hotel with Townbe ULC managing the day-to-day running of the centre.

Under that arrangement, Templegrade has agreed to a transparent profit-sharing arrangement whereby MBE receives 25 per cent of the gross income under the contract.

Mr Tobin said there are currently 300 people being accommodated at the hotel and MBE would receive €2.1 million for 2024-2025. Even if the number of people were to decrease to 200, that would still mean MBE would receive €1.4 million.

He claimed Vesta has an incentive to “drag out proceedings for as long as possible” while making considerable profits.

In a replying affidavit, Adrian Shanagher, the Vesta director, said his firm currently operates a contract with the department on a monthly rolling basis. He said MBE appears to be proceeding on the assumption that the department would grant it a new contract to house refugees immediately.

“From the defendant’s experience of dealing with the department, there is no reasonable prospect of that happening,” he said.

He also said MBE only has an agreement in principle to enter a lease with a third party, not a binding agreement. He further said Vesta put about €1.7 million into the property since it took it over and is entitled to remove its items from the property if required to do so.

On Monday, Mr Justice Denis McDonald agreed to enter the case to the fast-track commercial list.

Edward Farrelly SC, for MBE, said the defendant had agreed to mediation, which takes place next week, only after proceedings had issued. Gary McCarthy SC, for Vesta, argued the case did not meet the threshold for entry into the commercial list.

However, Mr Justice McDonald accepted the case. He welcomed that mediation is to take place and adjourned the case to later this month.