AG: 'A major difference is the potential cost to the state'

The attorney general told government it was “necessary” for applicants to the state mica scheme to “understand” why they weren’t getting the same terms of a similar scheme offered to owners of defective homes in Dublin. Cost was a major consideration.

“A major difference, of course, is the potential cost to the state, because of the extent of the remedial works required to address these problems,” wrote attorney general Paul Gallagher in a September 2021 letter to housing minister Darragh O’Brien.

Campaigners say the Dublin scheme was more favourable.

Sinn Féin TD Pádraig Mac Lochlainn recently called on government to provide these same terms to Donegal homeowners, saying, “The scheme is not working. For pyrite, over 3,000 families in Dublin and north Leinster got 100 percent redress.”

The attorney general warned that claims for demolishing and rebuilding houses – as opposed to repairing them – under the scheme would “climb very significantly (including in Donegal) as further claims are made”. Homeowners would claim for rebuilds because of “banking and insurance issues”, according to Gallagher.

In correspondence where he advised government on means of keeping the costs of the scheme down, Gallagher wrote, “In Donegal on the other hand, it is hoped that rebuilding would be the exception and that the other remedial options would more likely to be applicable.”

Demolishing and rebuilding, which campaigners maintain is required for many affected homeowners, would “have an enormous impact on the costing of any scheme”, wrote Gallagher.

Elsewhere in the advice Gallagher impressed upon government the importance of limiting the payouts the state would have to make and his opinion that affected homeowners would use it to get as much money from as possible, as reported by The Ditch yesterday.

‘A major difference, of course, is the potential cost to the state’

Months before government announced the most recent version of its mica scheme, then attorney general Paul Gallagher wrote to housing minister Darragh O’Brien with his advice on the programme.

In 2014 government introduced a pyrite redress scheme for homeowners primarily in Dublin and north Leinster whose houses had been affected by a similar crisis. Mica campaigners maintain this scheme is more favourable and have called on the state to offer similar terms to mica-affected homeowners.

The attorney general wrote it was important to differentiate between the two schemes – with cost to the state being a major difference.

“It is also necessary that homeowners should understand the reasons why the scheme is, as I understand it to be the case, intended to be different from the pyrite 100 percent scheme,” adding, “A major difference, of course, is the potential cost to the state, because of the extent of the remedial works required to address these problems,” he wrote.

Gallagher wrote of his hope that demolitions and rebuilds of houses would be the “exception” in Donegal.

“I understand that so far as Mayo is concerned the nature of the problem (involving pyrite in the blocks) means, for technical reasons, that it is more likely that a complete rebuilding of the house will be required in most cases. In Donegal on the other hand, it is hoped that rebuilding would be the exception and that the other remedial options would more likely to be applicable,” he wrote.

According to Gallagher homeowners in Donegal would seek rebuilds because of “banking and insurance issues”.

“Present experience, according to the department, indicates that approximately 50 percent of all claims made to date… are presented on a demolition and rebuild basis. I strongly suspect that this percentage will climb very significantly (including in Donegal) as further claims are made. Indeed it is evident from the homeowners' submissions that the homeowners will be seeking to rebuild because of what they regard as the adverse impact on saleability of their houses in the future, and of potential banking and insurance issues, etc., resulting from anything other than a rebuilding,” he wrote.

‘It is also important that no concession is made that the state has any liability’

Gallagher doubted engineers, hired by homeowners, would be able to “interpret the relevant regulations and guidelines in a rigorous manner”.

“Independently of that risk it will in any event be difficult for local engineers to detain the necessary objectivity and more particularly to interpret the relevant regulations and guidelines in a rigorous manner. All these and other factors will combine, in my view, to greatly increase the number of demolition and rebuild claims and that in turn will have an enormous impact on the costing of any scheme,” he wrote.

He also doubted local authorities’ competence.

“You and the department will be in a better position to make a judgment on this issue, but I believe it is barely conceivable that the local authorities will have the requisite time, expertise, resources, or capacity to properly scrutinise and verify the applications for compliance with conditions,” he wrote.

Gallagher feared this would lead to rising costs of the scheme.

“If an applicant's engineer advises that a full rebuild is necessary, it is not obvious how the local authority could reject such a claim, and decide that a less costly remedial option is appropriate, without at the very least a detailed examination of the individual house by an expert with the appropriate expertise and experience and without conducting a detailed analysis of the claim made providing a strong and coherent basis for its rejection,” he wrote.

Gallagher was clear that the state shouldn’t accept liability.

“It is also important that no concession is made that the state has any liability in this regard. The state is making a voluntary payment on the basis of no liability with the intent of assisting people in difficulty. I have seen no document or evidence that would suggest liability on the part of the state,” he wrote.

The Department of Housing has been contacted for comment.