Legal remedies for building failures: what can be done?

 

 

In November 2015, Dublin City Council served a notice on the residents of the Longboat Quay development requiring them to carry out essential repair works to address fire safety issues. This is one of a number of building failures to come to emerge in recent years. The most high-profile to date is Priory Hall, evacuated in 2011 due to breaches of Building Regulations; many believe that there are similar problems elsewhere. The discovery of damaging levels of pyrite in thousands of houses in Ireland has also had a devastating impact on thousands of affected owners of homes and businesses.

 

These failures highlight the lack of effective legal remedies under Irish law in respect of building defects. In many cases, the original builder/developer is insolvent, but homeowners have also found that legal remedies are complex, and difficult to access.

 

Why doesn’t the law provide a remedy?

 

Under Irish law, there are a number of limitations to remedies for building defects which may prevent recovery of a financial remedy by the affected homeowner.   The claim may be statute-barred before the homeowner realises that there is a defect. The homeowner also may not be party to the original building contract for the unit or building, and recovery of a remedy outside the law of contract is complex.

 

Even if a remedy is available against the original builder in contract, the builder may be insolvent, and the defect may not be covered by a defects policy. There is no system for comprehensive, mandatory, latent defects insurance for new houses and apartments in Ireland.

 

Should the State intervene?

 

State intervention in building failures to date has been on an ‘ad-hoc’ basis: a building failure occurs, and the State adopts a ‘wait and see’ approach to see whether the relevant legal relationships will provide a remedy.

 

The decision to intervene is taken after the event; therefore, the financial risk to the State of providing the remedy cannot be managed via the construction process, in order to reduce the risk of the building failure.

 

It is far preferable to invest in an effective building control system, supported by a legal regime that affords a remedy to homeowners, than for the State to continue to act as the ultimate guarantor of building failures.

 

The Irish system of building control disconnects financial risk from risk management, as the financial risk of a building failure, at least for a residential unit, will often lie with the purchaser of the unit, who has no means of managing that risk.

 

Purchasers rely on the building contractor, and on the local building control authority, which has powers of inspection and may order sites to be closed or Building Regulations breaches to be corrected. However, building control authorities aim to inspect only 12-15% of housing units being built. Although the Minister recently announced that resources for inspection are to be increased, this will not result in 100% of units being inspected.

 

What is done in other countries?

 

  1. Western Australia has a system of registration and regulation of building contractors and sub-contractors, administered by a public body.

 

  1. Many countries, including the UK, require a developer to obtain a permit to build, which involves review of plans by a building control authority before the permit is granted.

 

  1. Inspection of construction works by a competent professional, independent of the builder/developer, is fundamental to the building control system in the UK. In Ireland, there is no requirement that the person who certifies compliance with Building Regulations is independent of the owner/developer; they may even be an employee of the owner/developer, with obvious potential for conflicts of interest.

 

  1. Under English law, a cause of action for latent damage passes to subsequent purchasers of the unit.   The Irish Law Reform Commission recommended this in 1982, but it was not implemented.

 

  1. Many countries require mandatory latent defects insurance for construction of residential housing;

 

  1. A State-backed loan scheme for repair works was introduced in British Columbia to assist the owners of condominiums after many buildings were found to have leaks arising from inappropriate cladding and building envelope materials.

 

In 1982, the Law Reform Commission recommended the creation of a new statutory duty that a person undertaking construction work would be required to see to it that the work is executed is a good and workmanlike manner with suitable and proper materials. The duty would be owed to the person commissioning the work and to persons who subsequently acquired an interest in it – so the first and subsequent purchasers of an apartment, or house, for instance. The Defective Premises Bill that it drafted in 1982 was never implemented.

 

34 years later, it would be a very good starting-point.

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