THE COMPANY operating Dublin’s Morrison Hotel is being sued for €3.7 million in alleged unpaid rent.

Martin Ferris, the receiver appointed by Anglo Irish Bank to businessman Hugh O’Regan’s Thomas Read Holdings, has brought the proceedings in the Commercial Court against Morrison Hotel Ltd.

Mr Ferris has alleged that arguments on behalf of Morrison Hotel Ltd that it was entitled to offset money spent on renovations of the property against rent were “contrived” and that the hotel company had no bonafide defence to the rent claim.

Bernard Dunleavy, for the Morrison, said yesterday his side was denying the allegation it had “contrived” a defence.

On the application of Rossa Fanning, for the receiver, and with the consent of Mr Dunleavy, the proceedings were transferred to the Commercial Court by Mr Justice Peter Kelly.

In an affidavit, Mr Ferris said he was appointed by Anglo last July as receiver of the landlord’s interest in the hotel, operated by Morrison Hotel Ltd, whose directors are Mr O’Regan, Martin Conroy and Dolores Barry.

The shareholder of Morrison Hotel Ltd, Thomas Read Holdings, is in liquidation, and Mr Ferris said he was also receiver over an asset of the Morrison company.

He said the hotel was owned by Mr O’Regan, Patrick Kelly and Patrick Dunning and Morrison Hotel Ltd had, in October 2006, entered into two leases with the landlords relating both to the hotel itself and what was known as the Morrison Hotel Extension. Under those leases, the hotel company was to pay €1.4 million rent a year quarterly to Mr O’Regan for the Morrison Hotel and a further sum under the extension lease.

Mr Ferris said his solicitors wrote to Morrison Hotel Ltd on July 30th last advising that all future rent should be paid to him as receiver. It was also asked to confirm all rent to date had been discharged in full and he was informed by the hotel company’s solicitors on August 12th last that they were instructed rent had been discharged “to date”.

Mr Ferris said he was later told by its solicitors that Morrison Hotel Ltd was not liable for rent because of agreements entered into with Mr O’Regan in July 2008 and sometime during or after April 2009. He was also told Morrison Hotel Ltd and Mr O’Regan had agreed to offer credit against rent for works carried out by the hotel company of some €2 million and for leasing costs of €800,000.

If those alleged credits were in fact agreed at that time, the hotel company would not have been liable to pay rent after that but it had paid rent of €855,616 in July 2008, Mr Ferris said.

A draft report of April 2009 prepared for Anglo following financial due diligence of Morrison Hotel Ltd had recommended that rent payable would have to be renegotiated with a view to a substantial reduction and also stated a rent-free period was required for the remainder of the year and until there was a “substantial pick-up” in trading.

This was a recommendation and could not have been implemented unilaterally by the hotel company and Mr O’Regan without Anglo’s consent, which was not provided, Mr Ferris said.