The sale for €41 million by the Minister for Defence, Mr Smith, of the former military barracks at Ballincolling, Co Cork, to a property developer is being held up by a dispute over the lease, the High Court heard yesterday.
The lease holders claim that, under the terms of the leases, the property should revert to them.
The delay in disposing of the former Murphy Barracks at Ballincollig could, according to the Department of Defence, have significant financial implications as the estimates for the Department for 2004 have already been framed on the basis that the proceedings of the sale will be realised before the Government finalises the budget for 2004 in December.
The delay, the Department claims, could also have a knock on effect on the sale of remaining properties at the former Murphy barracks.
The Department also said the funds raised from the disposal of military properties are being invested in the redevelopment of other military installations and essential new equipment.
Yesterday, Mr Justice Kearns adjourned the hearing until Thursday to allow the Attorney General time to consider whether he should be present.
The judge was told that the directors of Ballincollig Holdings Ltd, with registered offices at South Mall, Cork, which claims to hold the interest in the leases, were alleging that once the lands ceased to be used as a military barracks they should revert to Ballincollig Holdings Ltd.
The purchaser of the barracks, O'Flynn Construction Company Ltd, with offices at Model Farm Road, Cork, has refused to finalise the deal with the Department until the dispute is resolved.