The private equity-backed company developing the former Clerys building on O’Connell Street, Dublin 1, has filed a court case against the retailer that was set to occupy a big chunk of it.

The legal action issued by Oces Property Holdings over the termination of a lease by Heatons, which trades as fashion retailer Flannels, has been admitted to the high court’s fast-track commercial division.

However, although Justice Denis McDonald has admitted Oces’ case, he has adjourned it until December to allow mediation to resolve the dispute. The two parties can apply to have the case brought back before December if mediation is unsuccessful, according to the Irish Independent.

Oces, a joint venture between Dublin-based Core Capital and pan-European real estate investment manager Europa Capital, is understood to be seeking compensation for the store fit-out and other costs or to have Flannels occupy its proposed site within the Clerys development.

Heatons is expected to argue that it does not have to move into Clerys, which is scheduled to reopen before Christmas and will include retail and rooftop hospitality.

In an affidavit, Oces Director Derek McGrath said that the company began redeveloping the Clerys building in 2018 and in November 2021 agreed with Heatons and Sports Direct Retail, as guarantor, on a 30K SF ground-floor and basement lease with an annual rent of over €1M.

Oces said that it had incurred significant costs in works requested by Heatons and that in January a joint inspection of the premises by architects for each party took place in anticipation of the issuance of the landlord’s certificate of practical completion.

After working through a snag list, a proposed second inspection did not go ahead, and when Oces notified Heatons’ solicitors in June that the certificate of completion had been issued, Heatons disputed its validity without the required 15 days’ notice of the pre-certificate joint inspection.

On July 14, Heatons solicitors wrote to terminate the lease agreement, claiming there had been a breach by the landlord. Oces is now seeking declaratory orders from the court in relation to the validity of the certificate of practical completion and the invalidity of the termination notice and, thus, for Heatons to honour the lease agreement or pay damages.