Gayle Killilea, who runs the retail unit at her husband Sean Dunne's D4 hotel site in Ballsbridge, Dublin

Developer Sean Dunne has told Dublin City Council that a shop run by his wife Gayle Killilea in the former Jury's hotel in Ballsbridge in Dublin 4 does not breach planning regulations. The developer said that there had been retail use on the site since 1975 and that the off-licence in the shop was permitted under the existing hotel publican's licence.

The response, seen by the Sunday Tribune, came after Dublin City Council sent a warning letter to the hotel group "relating to potential enforcement issues" at the former Jury's Berkeley Court hotel site which Dunne bought for €380m. The response was sent by planners Tom Phillips & Associates on behalf of Dunne's D4 Hotels, which operate the hotels, and addresses the council's concerns about the retail and off-licence as well as signage that has been erected. A temporary banner-type sign was removed by Dunne in September.

The letter also pointed to a case involving the Clarence Hotel in 1992 in which the High Court ruled that the change of a hotel garage to a pub did not constitute a material change of use and it was permissible to reallocate uses within an overall building.

"Further consultation has been entered into but a final conclusion has not been reached. The matter is still under review," a spokesman for the council said.

Dunne's Mountbrook Homes is currently seeking to develop a €300m apartment, hotel and retail complex on the site. The company has been asked to submit further information on the proposal.