State ordered to pay developer €32m

 

A judge has ordered the State to pay a development company more than €32 million damages over its failure to honour an agreement under which the company was to be given Harcourt Terrace Garda Station in Dublin and an adjoining building, formerly the offices of the film censor.

Durkan New Homes (DNH) claimed the agreement required it to be given the proeprties in return for building 215 affordable houses for first time buyers during the economic boom.

The company sued the Minister for Environment, Heritage and Local Government for some €40 million in the Commercial Court over failure to go through with this “swap”.

While the film censor relocated in 2009, the Gardaí had not completely moved out, Mr Justice Peter Chareleton noted today.

In his judgment, Mr Justice Charleton found the contract between the parties had been broken by the State defendants and Durkan New Homes was entitled to be paid the full €31.2million purchase price agreed for the site.

€967,000 had also been agreed between the parties as special damages. A ten month interest charge is also due to the company from the time of the grant of planning permission for the site up to the time of the disappointment of the contract, the judge added. That interest amount will be decided by the court tomorrow.

In their action, Durkan, who had proposed a development of commercial offices on the prime Harcourt Terrace site, claimed they should have had possession of the property by December 2008.

DNH said they completed their side of the deal by building 215 affordable homes at a number of sites in Dublin, and selling them at a 30 per cent discount of the market value for around €35.4million.

The houses were part of a scheme set up by the Government in 2005 and managed by the Affordable Homes Partnership (AHP). That was terminated in 2010 and AHP’S functions were taken over by the Minister’s department.

DNH said 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 argued DNH was not entitled to any damages because the contract provided for a penalty clause if the premises was not vacated. If the company was entitled to damages, those should be assessed at the market value of the garda station site.

That value in June 2006 was €17.7 million but in November last year was just €3 million, it argued.

In his ruling, Mr Justice Charleton accepted DNH’s claim was validly brought and the company was entitled to the return of the purchase money paid for the site, which was the full amount.

The judge also said he accepted evidence from Neil Durkan that he and his company “had never lead anyone up the garden path.”

The site itself remained only partially cleared, he noted.