Irish Asphalt (IA) provided aggregates to James Elliott Construction (JEC) for use in construction of a youth centre in Ballymun in Dublin.   Aggregates are small stones, quarried and used as infill under poured concrete floors in buildings.     The aggregates supplied to JEC contained reactive pyrite; this mineral expands upon contact with air and water, cracking floor slabs and forcing walls built upon floor slabs to ‘heave’ upwards.

The building in this case began to show signs of pyrite damage within a short period following completion.

Remedial works were carried out by JEC, which then sued IA as supplier of the aggregates. Section 14 of the Sale of Goods and Supply of Services Act 1893 implies a term of merchantable quality into contracts for supply of goods, where the supplier is acting in the course of a business.   Damages were awarded to JEC in the Irish High Court in May 2011, on the basis that IA had breached the implied contractual term of merchantable quality.

So far, so good for JEC. IA, however, appealed to the Supreme Court. In December 2014, the Supreme Court referred the defence raised by IA by way of a request to the European Court of Justice (ECJ) for a preliminary ruling.     The court made clear, however, that as a matter of national law, it would uphold the High Court decision and find Irish Asphalt liable for breach of the implied term of merchantable quality:

‘..as a matter of national law, Elliott Construction would be entitled to succeed on the grounds that there was breach of both the express term as to the supply of aggregate described as Clause 804 and the implied term as to merchantability, and Irish Asphalt’s against the outcome of the High Court decision would fail.’

The judgment, however, could not be finalised until the outcome of the reference to the ECJ for a ruling on the questions that raised an issue of European law.  Amongst the questions referred was whether the implied term of ‘merchantable quality’ was incompatible with a harmonised standard applicable to aggregates.

IA argued before the Supreme Court that the evidence presented to the High Court had not established breach of the relevant standard, and that in finding a breach of the 1980 Act, that the High Court had effectively imposed a new standard, incompatible with the existing European and national standard and thus contrary to European law.   (There is a requirement under the Technical Standards Directive, Directive 98/34, for Member States to notify the Commission of draft technical standards, and Member States must not recognise, approve or use any national standards that have not been through the notification procedure.)

Before the ECJ issues a ruling, an ‘Advocate General’ issues an opinion.  The opinion is not binding on the ECJ, but the Court often follows the opinion, and indeed there are a number of examples of Advocate General opinions that were not followed by the ECJ but were nonetheless referred to in subsequent cases in support of particular arguments.  Therefore, the Advocate General’s opinion is reviewed closely by the parties and observers, as a steer on how the Court may answer the question put to it by the national court.   In Part 2 of this post, I examine the Advocate General’s opinion in the case, issued in February 2016.

 

 

 

Why we need Building Regulations

Fri, Aug 21, 2015, 01:12

 

Sir, – In your editorial(“Building regulations: Politics over planning”, August 17th) you refer to the proposed exemption of one-off houses from the requirements of the Building Regulations as a “bonus to the one-off houses . . sucking the life out of towns and villages”.

Recent experience in Ireland has demonstrated that the problems of defective housing go well beyond this. The cost to the State of repairing Priory Hall and of the pyrite remediation scheme runs to tens of millions.

One of the disappointing aspects of the recent report on the regulations was the failure to consider why professional fees for building site inspections can be so much more expensive here than in the UK, where inspection of a one-off house typically costs less than £500 (€700).

Instead, it was decided to exempt one-off houses from the regulations altogether. One-off houses are not inherently lower-risk; the report itself notes that “small houses carry big risks”, for example in relation to radon, subsidence and septic tanks.

The result will be that houses will be built without any inspections, with potentially disastrous consequences for owners, future purchasers, and the public purse. Defects are often impossible for purchasers to see when deciding to buy. This is why inspection in the course of construction is mandatory in other countries.

It beggars belief that we would now choose to exempt new houses from inspections, given the misery that poorly-built housing has brought to so many. – Yours, etc,

DEIRDRE NÍ FHLOINN

School of Law,

Trinity College Dublin,

Dublin 2.

 

 

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.

 

2. 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.

 

3. 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.

 

4. 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.

 

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

 

6. 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.

DNiFhloinn Submission to DECLG re Building Control (Amendment) Regulations 2014

Long Room Hub Arts and Humanities Research Institute

Trinity College

Dublin 2

15 May 2015

 

Department of the Environment, Community and Local Government

Building Standards

Custom House

Dublin 1

Re:      Consultation – Building Control (Amendment) Regulations 2014

Dear Sirs,

I refer to the consultation process in relation to the Building Control (Amendment) Regulations 2014 (“the 2014 Regulations”) initiated by the Department in April 2015. I now enclose a submission for consideration in the context of that consultation process.

Rather than dealing with specific amendments to the 2014 Regulations, I have highlighted in the attached document a number of significant characteristics of the legal environment in which the 2014 Regulations operate, in order to highlight the significant prejudice to Irish home-buyers in accessing remedies for defective housing. In my opinion, the 2014 Regulations do very little to improve that situation.

I call upon the Minister to review the outcome of the most serious building failures that have come to light in Ireland in recent years from the perspective of whether the home-owners affected were able to obtain a financial remedy in order to rectify their homes.   The solution to these failures will take some time to devise and to implement, and will involve a package of law reform. I have set out the main issues and potential solutions in the attached submission.

I also call upon the Minister to consider the establishment of a National Building Control Authority in order to centralise inspection and enforcement functions of building control authorities under the 1990 Building Control Act, to administer the Building Control Management System, and to administer the register of building contractors that is to be put on a statutory footing later in 2015.

I am in my first year of a PhD at TCD on the topic of ‘Consumer remedies for defective dwellings: devising a model for effective redress’, for which I have been awarded a scholarship by the School of Law.

I was in practice for 14 years before starting the PhD, including 10 years as a specialist construction lawyer.

The starting point of my research is the lack of legal remedies available to home owners when defects emerge in housing; for example, because actions are statute-barred (as they were for many of the owners whose houses were damaged by pyrite), because the builder/developers are insolvent, or because the homeowner is not the first purchaser of the house/apartment, and thus has no remedy in contract against the builder.

The outcome of my research is likely to be an outline of the main law reform measures that I believe will be necessary to re-balance the relationship between consumers and builders in the Irish housing market, in order to provide effective, accessible remedies.

I am happy to meet with the Department in order to discuss any of these issues.

Yours sincerely,

 

Deirdre Ní Fhloinn

 

Long Room Hub Arts and Humanities Research Institute

Trinity College

Dublin 2

15 May 2015