CIE is seeking possession in High Court proceedings of a site in Dublin's city centre where a Johnny Ronan company has started work on what is planned to be Ireland's tallest office and hotel building.
CIE owns the site for the planned 22-storey structure at Tara Street and in 2015 entered into a lease agreement with Tanat Ltd, part of Ronan Group Real Estate (RGRE), to develop the property.
Tanat subsequently obtained planning permission in 2019 for demolition of the existing Tara House on the site and the construction of the hotel and office project.
As of August last year, Tanat informed CIE that all piling work on the site had been completed, but excavation works had been delayed.
Last month, RGRE CEO Rory Williams wrote to CIE group CEO Lorcan O'Connor saying that RGRE had encountered a serious issue with the planning status of the development with the existing permission due to expire this July.
In those circumstances, Mr Williams said it was clear the building would not be completed by July and RGRE intended to apply for new planning permission.
Mr Williams also said that the funding climate at present is not very favourable and that RGRE has financial services firm Cantor Fitzgerald "actively engaged in the market".
CIE said it was a term of the lease agreement that it was for five years with an additional 12 months to complete it.
As a result of the pandemic, among other things, CIE agreed a number of extensions to that five years with the most recent expiring last August.
CIE said although Tanat is entitled to another 12 months to complete, there is now no prospect of it achieving completion within that time.
Frank Masterson, CIE group property manager, said in an affidavit that his company had "already been more than reasonable" in the extensions it granted to Tanat.
It was "simply not credible", he said, to attribute the defendant's delays to Covid-19 in circumstances where the construction sector was shut down for only 23 weeks. Tanat had got the benefit of extensions totalling three years, he said.
Last November, CIE said it sought possession of the site after Tanat failed to discharge a licence fee payment of some €186,500 which became payable as part of the lease agreement. It sought the removal of all temporary buildings, plant and unfixed goods from the site.
Tanat said it was willing to pay the money but only if CIE agreed to a further extension of the lease agreement and consented to a new planning application being made.
CIE said it subsequently came to light that in November receivers had also been appointed to Tanat on foot of a charge held by Bank of Ireland. This gave rise to a separate and independent entitlement to CIE to terminate the lease agreement and a second termination notice was served on the defendant.
Tanat was given until January 22nd last to deliver up possession of the site but failed to do so and CIE issued proceedings against it.
On Monday, those proceedings were admitted to the High Court's big business commercial division on consent between Eoin McCullough SC, for CIE, and Paul Gallagher SC, for Tanat.
However, Mr McCullough told Mr Justice McDonald that since the proceedings were issued the defendant has applied for the matter to be admitted to arbitration.
That process will involve deciding the dispute over the validity of the termination as well as the construction of the lease agreement, according to CIE.
The judge said the President of the High Court deals with all applications to remit matters to arbitration. He therefore admitted the case to the commercial list but referred it to the President for the question of arbitration to be dealt with.
