Donie's up-date Blog Sunday

Galway City Council are to pay €1.5 million in legal costs over the Eyre Square development row

  

Galway city council has accumulated a €1.5 million bill in legal fees over a row with the original company contracted to carry out development work as part of the Eyre Square Enhancement Scheme.

The official estimated figure has been made public for the first time after the Oireachtas Public Accounts Committee asked the Department of the Environment, Community and Local Government to provide a note on the issues raised in the development of the project.

Speaking to TheJournal.ie today, local councillor Padraig Conneely said the redevelopment of Eyre Square was a “disaster from start to finish”.

“It was a gravy train for legal advisors  due to mismanagement by the city council,” he said. “They overspent to the tune of €10 million, as well as paying €1.5 million to advisors.”

Galway City Council’s plan to develop Eyre Square was approved by Government in May 2001 and over the next five years a total of €4.572 million was given towards the project.

Although the Department gave no further grants toward the project, it is estimated that the redevelopment cost in excess of €15 million.

Samuel Kingston Construction Ltd (SKCL) was appointed by the council to carry out the planned works by August 2005. The contract was valued at €6.36 million and a completion bond of almost €1 million was put in place by the building firm.

Although it was understood that many of the delays which occurred during the process were “not necessarily the responsibility of the contractor”, the council became concerned about the pace of work. Two notices were served on SKCL in September 2004 and February 2005.

On 27 June 2005, SKCL abandoned the site without notice and with just 70 per cent of the work complete. The council had already paid the company €3.73 million.

Arbitration and court hearings: Another company – which had originally tendered for the contract – were brought on board to finish the work. A contract fee of €4.8 million was paid to SIAC Construction and Eyre Square was formally re-opened in May 2006.

The council pursued SKCL for breach of contract and made a claim on the completion bond of almost €1 million.

However, SKCL argued that it was forced to quit the project after the council withdrew all sums paid to the company. It told arbitrators that the move by the council left the firm insolvent.

Both the arbitrator and the High Court agreed that the “premature” actions of the council left the contractor with no option but to withdraw from the site.

The court found that the contract had a further five months to run and, if negotiations were continued, an agreement may have been possible.

Following those judgements, the council brought the case to the Supreme Court who set the arbitrator’s ruling aside because of a failure to hear from an expert witness retained by the council.

The Supreme Court ruled that arbitration would have to proceed before a new arbitrator.

After the long legal process, SKCL and the council agreed to withdraw all claims and counter claims. The council dropped its claim against the €1 million bond, while SKCL agreed to pay €150,000 as a discharge of liability.

No admission of liability was made by either party. SKCL is no longer trading and the council is dubious as to how much of the €150,000 award will be recovered.

Poll results to date: Should utility bills be used to ensure the Household Charge is paid by all? 

73% said No

     

To date , only about 200,000 which is 12.5% of people who have registered to pay the €100 Household Charge which is due by the 31 March. The Government believes about 1.6 million households are liable for the charge but Minister Hogan said the deadline date will not change.

A National campaign has started, calling for people not to register for or pay the charge. Minister for the Environment Phil Hogan has said if the expected €160 million is not collected, provision of services by local government, including fire and emergency services, waste management and street maintenance could be affected.

Hogan also said it would not be fair if some people paid, and others did not.

To identify and track down non-payers, Hogan will use information held by the ESB, Revenue Commissioners, the Department of Social Protection and local authorities.

The Data Protection Commissioner raised concerns in January about the suggestion but, according to the Sunday Times, a plan has been worked out between the Department and Billy Hawkes’ office which will see collectors use utility bills to garner names, addresses and PPS numbers of those liable for the tax.

Online Poll Results: