State to pay €32m over failed site deal
THE State will have to pay out more than €32m in damages over its failure to honour an agreement to give Harcourt Terrace garda station in Dublin to a development firm.
Durkan New Homes (DNH) claimed it built 215 affordable houses for first-time buyers during the economic boom in return for getting possession of the garda station along with the adjoining film censor's office.
The company sued the Minister for Environment, Heritage and Local Government over the failure of the swap to go ahead after the gardai failed to move, and sought €40m as a result.
In a Commercial Court judgment yesterday, Mr Justice Peter Charleton found that the contract between the parties had been broken by the State and that DNH was entitled to be paid in full the €31.2m that amounted to the purchase price of the site.
The State, he added, had agreed and accepted €31.24m for the site. In addition, €967,000 had been agreed between the parties as special damages.
There was also a 10-month interest charge 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 amount is to be decided by the court today.
In its action, the building firm, which proposed a development of commercial offices on the prime Harcourt Terrace site, claimed it should have had possession of the property by December 2008.
DNH said it completed its side of the deal by building 215 affordable homes at a number of sites in Dublin, and selling them at a 30pc discount of their market values, equating to around €35.4m.
The houses were part of a scheme set up by the government in 2005 and managed by the Affordable Homes Partnership. It was closed down in 2010 and the organisation's functions were taken over by the minister's department.
DNH, which sought €40m, said its claim included the discount on the house sales plus about €5m 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 were not vacated.
In his ruling, Mr Justice Charleton accepted that DNH's claim had been validly brought, and that it was entitled to the return of the purchase money paid for the site which, in this case, was the full amount.