ONE OF the State’s biggest housebuilders, Menolly Homes, has told 550 north Dublin householders suing over structural defects to their homes that it cannot afford to pay any successful claims.
The company has warned the householders that their homes may never be repaired unless they accept a proposal for the creation of a €25.5 million trust fund to carry out the work.
The company, in a letter from its solicitors, ByrneWallace, to solicitors for the householders, says it is a client of the National Asset Management Agency (Nama) and is feeling economic difficulties “most acutely”.
The proposal was agreed before Christmas by Menolly and another building firm, Irish Asphalt, as a way of concluding a long-running court case over responsibility for the house defects.
The householders were not party to the proposal. But their agreement is required and the result of a ballot of householders on the proposal will be revealed at the Commercial Court tomorrow.
The proposal requires the agreement of at least 85 per cent of householders to pass.
If it fails, the proceedings, which have already lasted 150 days, are set to continue.
In its letter, ByrneWallace warns that Menolly will find it difficult to continue funding the case if the proposal is not agreed. It says householders should not take it for granted they will be able to pursue the company through the case or in individual claims.
Householders’ claims would succeed only “after a series of individual and exceptionally costly trials like the one that the Menolly companies have endured”, the letter stated.
Under the terms of the settlement, householders on four north Dublin estates will have their ground floors rebuilt and get up to €10,000 in compensation each.
In return, Menolly wants the owners to drop their legal action against the company over defects such as the swelling and cracking of walls and ceilings. These problems have been blamed on the presence of the mineral pyrite, which swells when it comes into contact with water.
A number of homeowners who have spoken to The Irish Timesexpressed unhappiness with the terms of the offer, and the short amount of time given for consideration – three days.
However, some said they felt they had little option but to agree by last Friday’s deadline, given the advice they had received.
Arthur Cox, which represents about 200 of the homeowners, has told its clients it believes Menolly’s solvency may be in doubt and that the company could be wound up rather than continue with the litigation with Irish Asphalt.
In a letter to homeowner clients, and seen by The Irish Times, Arthur Cox says there is "no doubt" they are entitled to a better deal than is on offer, but they would be left in "a most difficult position" if Menolly was unable to continue litigation.
The letter also questions whether the €25.5 million fund would be adequate to carry out all works and criticises the fact that the trustees are not party to the agreement.
“If Menolly fails to meet their obligations it is not clear who you can enforce against to ensure you get what you have signed up for under this agreement,” it said.
The settlement covers the houses Menolly built in Drynam Hall, Beaupark and Myrtle estates in Dublin, as well as houses on Beaupark estate built by Killoe Developments. Both companies are owned by Séamus Ross.
Menolly has blamed the problems in the houses on the presence of pyrite in infill material used in their construction. Irish Asphalt, part of the Lagan group of companies, which supplied the infill, blames faulty construction for the defects.
