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In October, Mr Justice Donald Binchy held that a decision by Dublin City Council to allow Carman's Hall on Francis Street in Dublin's Liberties be used and converted into a hostel was in material contravention of the area's local development plan.
The matter returned before the High Court today for final orders in the case, when the judge was told that the parties had reached an agreement.
It had been agreed that the facility can remain open until 1 May 2018 unless DCC takes steps to ensure the facility complies with the planning laws and does not conflict with the local development plan.
The facility opened before Christmas 2016 and has been used as emergency temporary accommodation for rough sleepers.
It has a capacity of 51 beds and has been run by the Simon Community and the Salvation Army.
Local residents through the Carman's Hall Community Interest Group, Michael Mallin House Resident's Association and community worker Elizabeth O'Connor brought High Court proceedings claiming the council was not entitled to convert the building into a hostel for the homeless.
They alleged the council’s decision on 28 October 2016 authorising change of use and refurbishment of the building was unlawful, breached the planning laws and should be quashed.
The residents want the building, owned by the Catholic Archdiocese of Dublin, to be used as a community centre.
It had been used as a community centre for many years before it was closed in 2013 over accessibility and fire safety concerns.
The council opposed the application argues the hostel was opened to deal with the "humanitarian crisis" of rough sleepers in Dublin.
Declan McGrath SC, appearing with Niall Handy BL for the residents told the court this morning that following discussions the parties had agreed the wording of the final orders in the case.
It had been agreed the court could make an order formally quashing the council’s decision and that the court could also make a declaration that the council’s decision amounted to a material contravention of the local development plan.
A stay on the orders - which would have required the hostel to shut - until May had also been agreed, counsel added.
James Connolly, appearing with Stephen Dodd Bl for Dublin City Council said his client was consenting to the orders.
Mr Justice Binchy welcomed the agreement.
He commended the residents for agreeing to allow the facility remain open "especially at this time of year."
He awarded the residents their costs of their proceedings against council, however he ruled that both sides should pay their own legal costs for a pretrial application where the council was successful in obtaining a stay that allowed the facility open to rough sleepers in December 2016.