Minister Phil Hogan males a statement to the Dail on the report of the Pyrite Panel: Before getting into the detail of this debate, I want to acknowledge the difficult and distressing situations faced by people throughout the country, who, through no fault of their own, are living with the legacy of building failures, including dwellings affected by pyrite. In the case of pyrite, many homeowners have been disowned by all of the main stakeholders including material suppliers, builders/developers, banks and insurance companies.
I have seen at first hand homes affected by pyrite and the anguish and upset it has caused for people. Indeed in that instance such was the stigma attaching to the issue, that the owners did not wish it to be known that their home was affected by pyrite.
I’m sure all of us here empathise with those homeowners and it was against this background that I set up the independent Pyrite Panel in September, 2011 to assist in finding a resolution to the pyrite problem for homeowners.
It may be convenient for some people to try and shift the blame for all the failures, including pyrite, on to the State and on a supposedly light touch regulatory system but that would totally ignore the role and responsibilities of the main stakeholders involved in the delivery of “fit for purpose” building projects.
A strong statutory framework for the regulation of construction activity exists under the Building Control Acts 1990 and 2007. The Building Regulations set out the legal requirements for the design and construction of buildings, including houses and extensions; detailed Technical Guidance Documents outline how these standards can be achieved in practice; and the responsibility for compliance rests primarily with developers/builders who engage professionals as required to ensure statutory requirements are met.
From a regulatory perspective, there is much that can be done to improve compliance with, and oversight of, Building Regulations and in July of 2011 I announced a number of measures to enhance the Building Control system. Following a recent public consultation process, I am currently finalising the Building Control (Amendment) Regulations 2012 for signature into law.
The new regulations will provide, among other things, for the introduction of mandatory certificates of compliance by builders and designers of buildings confirming that the statutory requirements of the Building Regulations have been met in relation to the building concerned. In addition registered professionals will be required to inspect works during construction and also to certify that completed buildings are in compliance with the requirements of the Building Regulations.
During the course of its work, the Pyrite Panel compared the guidance on hardcore in the Building Regulations in Ireland with that in the UK and Canada and concluded that the Irish Building Regulations compared favourably with those in the UK and Canada and the guidance was reflective of the knowledge and experience at that time in Ireland. Some people have made the point that while the regulations may have been comparable with the other jurisdictions, the lack of enforcement by building control authorities was a major contributory factor to the pyrite problem. However, the Panel concluded that, on balance, it would not have been reasonable to expect that the unprecedented issue of pyrite in hardcore could have been identified by building control officers during normal inspections.
Another issue which has given rise to some debate is the level of knowledge of pyrite in Ireland prior to 2007 and this is dealt with in the report. Having considered this issue, the Panel concluded that there was limited knowledge of pyrite prior to 2007 and in fact cracking resulting from pyritic heave was initially misdiagnosed.
The general view among engineering professionals is that there was very little knowledge of pyrite prior to 2007 and there was only passing reference to it in third level engineering courses.
A pyrite problem occurred in Canada in the late 1990s and is often quoted as being a reason why there should have been an awareness of the pyrite problem in Ireland. However, the Canadian problem only came to light here consequent to the manifestation of pyrite problems here.
I have stated on many occasions in the past that I did not believe that the State was responsible for the pyrite problem and this position has been vindicated in the pyrite report, where those stakeholders identified as having responsibility include quarries, material suppliers, builders/developers, vendors and relevant insurance companies.
However, while the State is not responsible for the pyrite problem or liable for the costs of remediating pyrite affected dwellings, I believe it has a role and a duty to assist homeowners find a resolution to the pyrite problem and this was one of my key objectives in setting up the independent Pyrite Panel. Indeed, the pyrite report points to the important role for the State in ensuring that responsible parties engage constructively in processes to deliver solutions for affected homeowners. I am conscious of the considerable period of time that many homeowners have been trying to get a resolution to pyrite problems and without success. There is now an imperative to bring this waiting to an end and quickly move to providing solutions for homeowners and this is now my focus. However, I think it is worth saying here that a sizable number of dwellings have been and, continue to be, remediated under various processes, including by some responsible builders who are undertaking remediation works themselves, under structural defects insurance and other types of insurance. I welcome this progress and believe it is the route that should be embraced by many other responsible stakeholders.
However, it is not a sustainable viewpoint that the taxpayer should be made liable for the costs associated with the remediation of pyrite damaged dwellings. The costs should fall to those responsible and I welcome the Panel’s clear view on this matter. The Panel was unambiguous in its view that the parties with direct or indirect responsibility for the pyrite problem should face up to their responsibilities and provide solutions for homeowners and that the State is not responsible for the pyrite problem or liable for remediation costs.
I would now like to address a number of issues in the pyrite report which have generated some debate, the first is the number of suspected developments/dwellings and another is the categorisation of dwellings to prioritise remediation works.
The Pyrite Panel undertook a desktop study, in conjunction with stakeholder consultation, to establish facts in relation to the potential exposure to pyrite problems. The information was gathered from a number of sources including local authorities, structural guarantee providers, representatives of homeowners, private builders, construction professionals and public representatives and was cross referenced to verify, as far as practicable, its validity. Estimates of dwellings that may be affected by pyrite are significantly less than the figures which have been speculated in the public domain. No substantive basis, that I am aware of, has been put forward for the figures of 60,000 or 70,000 dwellings being quoted by various sources whereas the estimate of seventy four estates with 12,250 ground floor dwellings arrived at by the Pyrite Panel is supported by a robust methodology which is set out clearly in the report. Those figures represent the position as of March 2012, and, based on the methodology used by the Panel to arrive at the figures and taking account of the rate of presentation to date in Ireland, I would have confidence that these figures represent a reasonably accurate picture of potential future exposure. I might also point out that in twenty three of the estates included in the above figures there are no claims with guarantee companies nor is there any evidence that any dwellings in those estates have been remediated so there may be some overestimation in the figures.
The Panel suggested that, based on the number of claims with guarantee providers, approximately 850 dwellings (the March 2012 figure) were in need of immediate remediation. The use of this figure has given rise to some concern among people whose homes are affected by pyrite, people are concerned that if they are not included in the figure they may not be included in whatever remediation processes are finally agreed. I want to make it clear that the figure of 850 dwellings categorised as “red” is an indicative figure only and will not be used to determine admissibility to a remediation process. The Panel used the information it had collected to give an estimate of the possible distribution of ground floor dwellings across the three classifications of red, amber and green. However, it should be noted that the inclusion of a dwelling in the 850 figure does not necessarily mean that the dwelling has been confirmed as having reactive pyrite in the hardcore and/or has pyritic heave.
In the preparation of its report, the Panel consulted widely, meeting in excess of forty groups from a broad range of backgrounds: homeowners, industry, academia, professional bodies, banks, insurance providers, local authorities and other individuals who had a particular expertise in dealing with pyrite. It also received a number of submissions from various groups which, I understand, the Panel also considered. While not everyone may agree with all of the recommendations in the report, it is well researched and the recommendations are supported by a broad based consultation process. I would like to thank the members of the Pyrite Panel for providing me with a thorough and comprehensive analysis.
Not all dwellings in estates where pyrite has been identified will manifest pyritic heave and significant damage and the reasons for this are outlined in the report. Recognising this position, the Panel recommends a categorisation of dwellings to determine appropriate remediation approaches and these are detailed in the report. I agree with the recommendation that it would be unreasonable to expect dwellings not exhibiting damage to be remediated simply because there is pyrite in the hardcore and this position is supported in the High Court judgement of Mr Justice Charleton in the case of James Elliot Construction-v-Irish Asphalt which is now on appeal to the Supreme Court. In the judgement, Mr Justice Charleton stated that “it is not yet reasonable to remove the infill ….solely because of the high sulfur content of the infill. That only established a possible danger into the future. Removing the infill because of actual heave is on the other hand entirely reasonable.” The pyrite report details the basis for arriving at its decision. I believe the approach suggested by the Panel to classify the dwellings into red, amber and green is a practical and sensible approach to prioritise the remediation of affected dwellings. .
The remediation of dwellings is an expensive and disruptive process and I agree with the view expressed by the Panel that it would be unreasonable to remediate dwellings if they are not exhibiting pyrite related damage. However, the recommendation is made on the basis of a system being in place to repair such dwellings if and when they exhibit damage in the future.
A number of recommendations in the pyrite report point to the need for constructive engagement by stakeholders in providing solutions for homeowners. Following receipt of the pyrite report in late June, I met with the Construction Industry Federation, the Irish Concrete Federation, HomeBond, the Irish Banking Federation and the Irish Insurance Federation. I outlined to them the key role which I believe they can, and should, play in providing a solution to the pyrite problem. The Panel expressed its disappointment at the lack of engagement by stakeholders with homeowners in trying to resolve the problem and I concur with that view. I set a deadline of the end of September for the stakeholders to come back to me with credible proposals.
All the stakeholders came back to me by the deadline with their individual responses. While they have outlined in varying levels of detail how they see the pyrite problem being resolved and in some cases how they might participate in a resolution process, they have not come back with definitive proposals that individually or collectively would see stakeholders provide a voluntary solution for homeowners. My initial response is one of disappointment that the stakeholders have not responded more positively in this regard. However, they have provided detailed responses and some have offered to actively participate and engage in any structure that might now be established to progress the issue.
There have also been further communications in recent days from some of the stakeholders and I am now evaluating these to see if they can provide a basis to make progress.
In addition to recommending engagement by various stakeholders, the pyrite report also recommended the establishment of a resolution board which could be funded by a levy on the construction/quarrying sectors and the related insurance sector.
As I have previously stated, my preferred approach to deal with the pyrite problem was for the stakeholders to work with me in finding solutions for affected homeowners. This included in particular, sourcing the necessary funding to meet the costs of remediation works. I In the absence of credible proposals from the stakeholders, I have made it abundantly clear that I would impose a solution along the lines recommended in the pyrite report in relation to the establishment of a resolution board funded by a mandatory levy on industry.
I want to be absolutely clear on this, I have asked my Department to quickly finalise arrangements and terms of reference to permit the establishment of the proposed Resolution Board next week and to provide the relevant stakeholders with these details. My preference is that all of the main stakeholders would engage with the proposed Board. This will give a final opportunity for all those directly or indirectly accountable for what has happened to respond, to play a lead role in the remediation programme and to contribute to the cost of its resolution. I am hopeful that all of the stakeholders will respond positively within 10 days. However, if this is not the case, I will have no option but to ask Government to sanction the necessary steps to impose the type of levy envisaged by the Panel in its report and in that way to provide finance for the resolution.
The costs of remediating pyrite damaged dwellings must fall to those stakeholders who are deemed to be responsible for the pyrite problem and who are so identified in the pyrite report. I want to make it clear that I will do what is necessary to ensure that effective solutions are provided for affected homeowners.
As I have said earlier, I am conscious of the long period of time that many affected homeowners have been waiting to get a resolution to this complex problem and I will not delay in finalising robust proposals and to bring this phase of the process to a speedy conclusion.
Nobody should be in any doubt which side of this debate that I am supporting. It is the homeowners that have suffered for far too long with this problem.