The Gazette 1978

GAZETTE

JULY-AUGUST

19

Correspondence National House Building Guarantee Scheme 19th July, 1978 Dear Sir, It seems strange that you chose to publish for a second time the misinformation in the Dublin Solicitors' Bar Association Comment on the National House Building Guarantee Scheme. As I was partly responsible for drafting the scheme, but not of course for policy decisions about its scope, I feeH should correct'again two serious errors that may mislead the profession: 1. The Comment says three times that the purchaser "must show that he had exhausted his remedy against the builder before he could claim against the Registration Body". The writers of the Comment found "particularly worrying" a mythical provision "that the protection of the Scheme will only become available" and "any guarantee Scheme only came into effect" after a purchaser has exhausted his remedies against the builder which, they say, could take at least eighteen months to two years. In fact Rule 28 of the scheme says only that the purchaser has to show that "any other remedy available to the Purchaser by legal action is not adequate and appropriate to the circumstances". There will be cases where the purchaser has a clearcut remedy in law against a solvent builder that is "adequate and appropriate to the circumstances"; there will be many cases where he has not, particularly if a house is not fully habitable during the period of any delay in enforcing a remedy, in which case the purchaser is protected under this Rule. (It is an interesting comment on the legal system for which our profession is partly responsible that the ordinary remedy for defects under a building contract is recognised by die Association to be so inadequate. No doubt the Association has been taking strenuous action over the years to try to improve the remedy). 2. "It is further considered that the form of words used to preserve Common Law rights should be extended to provide, not merely that nothing in the Contract documentation should deprive the Purchaser of such rights, but that nothing in the Contract" "nor in the C.I.F. Guarantee Scheme" should deprive the Purchaser of his rights at Common Law". Apart from the fact that there is no "C.I.F. Guarantee Scheme" such a provision would merely reveal the crass ignorance of the draftsman. It is perfectly clear in law that a guarantee in one contract that does not purport to do so does not take away the party's rights for breach of another contract (indeed there are many decisions holding that such a guarantee even in the same contract will not take away common law rights in the absence of clear words). The statement in the Comment that the guarantee takes away an insurance company's right to exercise by subrogation the purchaser's claim for negligence by the builder, is equally strange. So that the purchaser will be aware of his rights, the explanatory notes on the guarantee certificate say specifically—"The Scheme does not take away your common law rights or any other rights you may be given by the building contract. Disputes about such rights, for example in connection with deifects that are not structural, date of entry, price, standards of building etc. are not within the Guarantee Scheme".

May I mention that if the Association is interested in documents that actually do deprive purchasers of rights, often in the most inequitable way, they might perhaps look at some of the building contracts drafted by solicitors and counsel that are in circulation. May I also suggest more fruitful action than their Comments that the Dublin Solicitors' Bar Association could take in their zeal to protect purchasers of new houses: (i) investigate the hours spent conveyancing each house by the solicitors for builders of large estates, recording separately the hours spent by qualified and unqualified staff; (ii) investigate the extent to which any part of such conveyancing work actually requiring legal knowldege is carried out by counsel employed by solicitors for the builder, and what proportion of the solicitors' fees are diverted to counsel; (iii) decide if the opinion of building societies that, although they are paid for doing so, solicitors for purchasers cannot be trusted to tell a good title from a bad one, and therefore must be augmented by a building society solicitor, is justified; (iv) consider in what proportion of cases building societies have to enforce mortgages on new building estates, in what proportion of such cases there would be likely to be a defect in title overlooked by the purchaser's solicitor, even if no building society solicitor were employed, and consider whether the risks involved could be more cheaply covered by insurance than by employment by purchasers of a separate building society solicitor in every case; (v) decide if there is by any chance room for im- provement in the present system of conveyancing, and if so would it be possible for the solicitors' profession to do anything to bring that improvement about; (vi) in the light of the above investigations, consider whether the charge per hours work paid to solicitors in connection with the conveyancing of houses on new estates with a common title is no more than a reasonable remuneration for skilled services rendered, and whether the total 'conveyancing' costs that attaches to each such house could be at all reduced. Should these investigations reveal that some saving on total conveyancing costs is possible, then of course there would be little difficulty in devising a scheme by which the saving is diverted to paying a premium for a system of insurance against defects that would give the "total or even adequate protection" which the Association rightly seeks for purchasers. Yours faithfully,

MAX W. ABRAHAMSON, 28/32 Upper Pembroke Street, Dublin 2.

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