AN INVESTMENT company is in dispute with a receiver over some €1.9 million it allegedly owes in arrears for rent of two floors of a building at St Stephen’s Green in Dublin, the Commercial Court heard yesterday.

In February 2008, Shelbourne Development (Europe) Ltd rented the first and second floors of 75 Stephen’s Green to international hedge fund company Hedgeserv Ltd, with one of the company’s founders, James Kelly, acting as guarantor on the 25-year lease.

The initial annual rent was €2.2 million, including €76,000 for the use of 17 car park spaces.

On December 8th, 2011, Michael McAteer, a partner in Grant Thornton, was appointed receiver over Shelbourne after the company defaulted on loans to Bank of Scotland (Ireland) Ltd.

Yesterday, Mr McAteer applied to have an action over some €1.9 million rent admitted to the fast-track Commercial Court.

The application was opposed by Rossa Fanning, for the defendants, who argued the matter was not commercially urgent and also contended delay by the receiver bringing the proceedings. His side also argued they were entitled to a rent abatement because of engineering problems with the building, particularly in relation to air conditioning, counsel said.

Mr Justice Peter Kelly found no delay by Mr McAteer, who was appointed last December, in bringing the case. He transferred the matter to the Commercial Court and adjourned to October.

In his affidavit, Mr McAteer said Hedgeserv had argued an agreement had previously been reached between Shelbourne and Mr Kelly that a reduced rent would be paid until the air conditioning was fixed.

Mr McAteer said he was satisfied there was no such agreement because the books showed Shelbourne had invoiced Hedgeserv for the full rent due per quarter.

Hedgeserv was “opportunistically” seeking to take advantage of alleged air conditioning issues raised by other tenants and had no bona fide defence, he said.