A High Court decision yesterday means the Digital Hub Development Agency can buy for €58,100 a site of less than one acre in south inner city Dublin. The site was said to have a potential value of €3.5 million given its development potential as part of the Digital Hub area.
In June 2001, developers Martin Keane and Gerry O'Reilly had paid £25,000 for the freehold interest, under a 99-year lease dated 1958, in the site at Nos 10, 11 and 12 Rainsford Street, Dublin 8. In August 2001, Lee & Company (Dublin) Ltd, assigned to the Commissioners of Public Works in Ireland the lessee's interest under the 1958 lease.
In February 2003, the Commissioners of Public Works served a statutory notice on Mr Keane and Mr O'Reilly of intention to acquire the freehold interest in the premises.
All property owned by the commissioners in relation to the Digital Hub was later that year transferred to the Digital Hub Development Agency, including the premises at Rainsford Street, and the agency claimed it had a legal entitlement under the Landlord and Tenant Ground Rents Act 2003 to acquire Mr Keane's and Mr O'Reilly's interest in those premises.
That claim was disputed by both developers and they brought the High Court proceedings challenging a Circuit Court decision affirming an order of September 2003 that the Digital Hub agency could buy the lease for €40,600.
In a reserved judgment following an eight-day hearing of the complex case, Mr Justice Iarfhlaith O'Neill concluded that Mr Keane and Mr O'Reilly were entitled to a conveyance of the fee simple. He said the determination of the purchase price is governed by the Landlord and Tenant (Amendment) Act 1984 and he concluded the agency could purchase the lease from the respondents for €58,100.
In this case, the interest being sold is the fee simple in circumstances where (because of the lease term) there will be no occupation by the fee simple owners for at least 56 years, he noted.
The judge said the purchase price of €40,600 fixed by the Circuit Court Registrar did represent some uplift on the £25,000 price paid for the site in 2001. However, he said a sum of €17,500 should have been added to reflect the development value.
He based that view on accepting the actual value of the site was €3.5 million because of its development potential as part of the Digital Hub area. However, while giving fair weight to the contribution of the site to that value, he also had to bear in mind the remoteness of the fee simple owners' right to possess and thereby enjoy that development potential.
In those circumstances, he concluded only a very small portion of the full value of the premises enhanced by that development value should be reflected in the purchase price. In this case, he estimated that amount at some €17,500.
