The High Court has ruled Priory Hall developer Tom McFeely has breached an order directing him to fireproof the complex.
Dublin City Council wants another contractor to replace Mr McFeely and his company Coalport on the job.
The council and the developer say they do not have the funds to pay a new contractor.
Internal fire safety works have been carried out on 40 apartments in the last two weeks but Dublin City Council says no progress has been made on the bigger job on the external walls.
The court has heard the evacuated Priory Hall residents are now scattered around the city: 44 families remain in the Regency Hotel, 70 are in Bewleys Hotel while another 41 families have been offered accommodation.
The council is implying developer Tom McFeely is effectively in breach of his undertaking to carry out scheduled remedial works and wants him to fund a new contractor.
The developer's lawyers say he is not in a position to pay, while the council insists it cannot afford to meet the cost of a new contracter either.