Friday 28 October 2016

Jim O'Callaghan: Law needs to make building firms liable for defective work

Longboat Quay
Longboat Quay

The residents of Longboat Quay are in a difficult position. The homes in which they live are not compliant with fire regulations. The primary cause for this rests with the builder, who failed to construct the development to ensure it was fire compliant.

When a homeowner discovers a significant defect in a newly-constructed dwelling, they immediately look to the builder to remedy the defect. It is a basic principle of law that if you buy a product from a person and that product is defective, then you are entitled to seek compensation from the manufacturer.

If a dwelling has not been properly constructed, a resident can bring the builder to court and require him to pay for the remedial works.

But this principle is currently ineffective because many of the companies that previously constructed and sold houses and apartment blocks are now in liquidation or receivership. They are defunct companies and have no assets to pay for the works. There is no point in a homeowner instituting proceedings against a defunct and insolvent company, since the homeowner will never be able to enforce the judgment to secure any money awarded.

So why can't developers who are now back in business be held liable for previous defective construction work? The reason does not occur is because all large housing estates and apartment blocks were built through companies. Sometimes a development company was also established to sell the apartments. It is these companies that, in law, are responsible for the defects, since they were the legal entities that built and sold them.

House purchasers can institute proceedings against these corporate entities, but not against the person behind the companies. Understandably, it is a source of great annoyance to people that developers, who financially benefited when their companies sold apartments and houses, do not experience any financial claim against them when the same apartments are found to be defective.

It is a complicated area of the law to seek to hold persons behind companies personally liable for the negligence of those companies. Nonetheless, the law should be changed so people who financially benefit from companies are made responsible if those companies construct and develop defective homes. This could be done by a guarantee system, which would hold them personally liable in the same way as arises if a company borrows money from a bank but the person behind that company is forced to provide a personal guarantee.

The responsibility to remedy the Longboat Quay defects will now fall upon the Dublin Docklands Development Authority and the City Council. However, once the defects have been fixed, those State agencies should take whatever steps are necessary to see if any of the persons directly responsible can then be held to financial account.

Jim O'Callaghan is a senior counsel and a Fianna Fail member of Dublin City Council

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