The Gazette 1978

DUBLIN SOLICITORS' BAR ASSOCIATION

Comment on the National House Building Guarantee Scheme

5. that the guarantee would take effect only after the purchaser had failed to get satisfaction from the builder. Primary liability would lie at all times with the builder and the purchaser must show that he had exhausted his remedy against the builder before he- could claim against the Registration Body. The Working Paper points out that under the English Scheme, the Council's liability is wholly independent of the builder's liablity; 6. that the Scheme would not guarantee the solvency of the builder and would fail to protect a purchaser against the loss of his deposit or any interim payments should the builder become bankrupt or go into liquidation, before the dwelling has been completed. Examination of the Scheme, in the light of the above points, establishes that the Law Reform Commission's criticisms of the draft version were substantially valid, as all the defects listed in its Working Paper have been carried through into the Scheme as introduced. There can be no doubt that the operation and scope of the Scheme is very limited. The Scheme applies only to a restricted figure of £15,000 in respect of any one dwelling seems almost inadequate already and is not index-linked. The maximum figure of £250,000 recoverable in respect of any one builder may seem a reasonable sum but, in the context of a big builder on a large estate, it is a very small sum indeed. The provision that the protection of the Scheme will only become available when the purchaser has exhausted his remedies against the Builder is particularly worrying. It could take at least eighteen months or two years to exhaust any remedy against the Builder and any guarantee Scheme that only came into effect after such a lapse of time would be of little benefit. It was hoped that the C.l.F. had accepted this point, but it is alarming to see their President quoted in the Irish Times recently as saying "Responsibility for faults was taken by the Builder of the house, and the guarantee applied to the purchaser or his successors only if the builder defaulted". That the Scheme fails to guarantee the solvency of Builders during the construction of the dwelling leaves the purchaser open to a serious risk which it would have been hoped any such Scheme could have cured. The size of booking deposits and stage payments being sought today and the number of building companies which are newly- formed limited liability companies, having only a small capitalisation, means that the risks taken by purchasers who pay deposits to such builders are very considerable. Further concern is caused by the manner in which the Schemc is, at one and the same time, extended to protect succcssors in title to the original purchasers of dwelling- houses, but limited in the extent of that protection. The Scheme provides that a Builder shall have no liability to a successor in title to a dwellinghouse where the successor 81

This Scheme was set up by the Construction Industry Federation, with the approval of the Department of the Environment, in September 1977. Since its introduction, the Scheme received very considerable and, in some respects, potentially misleading publicity from all branches of the media. The Dublin Solicitors' Bar Association is concerned to warn its members and the public about certain inherent shortcomings of the Scheme. Broadly, the scheme is intended to give to the purchaser of a new dwellinghouse, purchased within the terms of the Scheme, a guarantee in respect of "major structural defects" arising within six years of completion of the dwelling. Claims under the guarantee are limited to £15,000 on any one house and to £250,000 against any one builder. "Major structural defect" is defined within the scheme as "any major defect in the foundations of a dwelling or the load-bearing parts of its floors, walls and roof or retaining walls necessary for its support which affects the structural stability of the dwelling". "Dwelling" is defined as "any house, bungalow, maisonette or flat including any garage forming an integral part of the structure thereof". The Law Reform Commission, in its Working Paper No. 1-1977 entitled "The Law Relating to the Liability of Builder, Vendors and Lessors for the Quality and Fitness of Premises", commenting on the draft of the present Scheme (which was all that was available at that time) stated that the Scheme, as proposed, seemed to suffer from certain serious defects and listed the most important as being: 1. that the proposed Scheme would cover "specu- latively built houses" only. Contract houses or incompleted houses would not benefit from the protection of the Scheme; 2. that the Registration Body created under the Scheme would guarantee major structural defects only; minor structural defects, or non-structural defects, would not be guaranteed; 3. that the guarantee would be limited to a period of six years only. The Working Paper points out that similar schemes in Northern Ireland and England give a ten-year structural guarantee; 4. that the Registration Body administering the Scheme would be run by the C.I.F., that it would be a builder's body exclusively and would have no outside representation. While two Government Observers would be permitted to attend, no other interests would be represented, such as consumers, finance houses, trade unions, etc. Since at present the C.l.F. represents a mere 30% (approx.) of all builders in Ireland, the composition of the Registration Body would not be sufficiently representative to inspire the public confidence necessary for the success of such a schcmc)