James Elliott Construction Limited v Irish Asphalt Limited

In July 2011, we reported on the finding of the High Court that the presence of pyrite in infill supplied by Irish Asphalt Limited and used in the construction of a building in Ballymun had caused significant pyrite heave to the building rendering it effectively useless. Damages as against Irish Asphalt Limited were assessed at €2.6 million. View our previous article here.

The judgment of the High Court is currently under appeal to the Supreme Court. On 12 December 2012, the Supreme Court heard submissions from both parties as to the sequence in which it should hear the preliminary issues. The three preliminary issues agreed by the parties are (i) breach of contract; (ii) causation of damage; and (iii) the incorporation of the terms and conditions into the contract between the parties. The decision of the Supreme Court on the sequence of the preliminary issues is expected soon. The decision will be followed by a full hearing of the preliminary issues.

The Pyrite Panel

Following the decision of the High Court, Homebond decided to withdraw insurance cover for pyritic heave damage, leaving many affected homeowners without the means to remediate.  This prompted the Government to establish an independent panel, known as the Pyrite Panel (the “Panel”), to report on the scale of the pyrite problem and to propose solutions.

The Panel published a report in June 2012, which contained 24 recommendations dealing with the methodology of remediation; the establishment of a resolution board; issues regarding funding for the remediation process; and a review of consumer protection provisions.

Implementation of Recommendations

In January 2013, as recommended by the Panel, the National Standards Authority of Ireland published new standards on pyrite (the “Standards”). The Standards provide a structured protocol for assessing and determining whether or not a building has been damaged by reactive pyrite and specify a methodology for the remediation.

In February 2013, in accordance with the recommendations of the Panel, the Minister for Finance, Mr Michael Noonan TD, announced an exemption from the Local Property Tax for homeowners who have experienced damage to their homes due to pyritic heave.

More recently, in April 2013, new Building Control Regulations (SI No 80 of 2013) were introduced in an effort to prevent the future reoccurrence of poorly constructed dwellings and pyrite damage. The Regulations, which will have effect from 1 March 2014, require both the builder and an assigned certifier (registered architect, engineer or building surveyor) to certify that a completed building complies with the relevant legislative requirements.

Remediation and Funding

One of the Panel’s recommendations was that homeowners should not be required to bear the costs of remediation. Discussions between the industry stakeholders have culminated in a proposal to fund the process with loans from the banks, which would be repaid by the imposition of a levy on the insurance and quarrying industries.

The Department of the Environment, Community and Local Government is currently drafting the Pyrite Levy Bill to provide a statutory basis for the imposition of such a levy. The Bill is expected to be published later this year.

Pyrite Remediation Board

The Minister for Environment, Community and Local Government, Mr Phil Hogan TD, announced the establishment of the Pyrite Resolution Board (the “Board”) on 18 December 2012. The purpose of the Board is to oversee the effective implementation of a remediation programme for pyrite damaged dwellings and to administer the drawdown of funds to pay for remediation works.

The Board held its first meeting on 25 February 2013.  Following the meeting, Minister Hogan indicated that the Board will shortly “invite applications from eligible homeowners for inclusion in a remediation programme”. The Standards, outlined above, are to be used by the Board when dealing with claims for remediation.

Conclusion

Progress has certainly been made in addressing the problem of pyritic heave since the 2011 High Court judgment and the subsequent publication of the Panel’s report. The critical point is funding and the levy to be imposed on the insurance and quarrying industries, which is likely to be a contentious matter.