COMHAIRLE CONTAE ÁTHA CLIATH THEAS
SOUTH DUBLIN COUNTY COUNCIL

MEETING OF RATHFARNHAM AREA COMMITTEE

Tuesday, March 08, 2011

MOTION NO. 6

MOTION: Councillor C. Keane

Cathaoirleach's Business

"That this Committee discusses the expiration of the bond at Loreto Abbey - that a full report on this be presented to this Committee in order that we might come to some agreement to safeguard the rights of Residents to resolve the difficulties (as tabled by this Councillor previously)." 

REPORT:

Historically, security required by South Dublin County Council, (and most other authorities) has been by way of cash lodgement, an insurance company bond, or a bond from the Construction Industry federation.  Up to recently, the Council has not ever had to rely on a bond to complete a development, although cash lodgements have been sequestered.  

The normal procedure has been that where there are works outstanding, and the developer fails to carry them out, the Council sequesters the appropriate amount of cash security, takes the particular areas in charge, and uses the security to complete the works.

Invariably, in the past where outstanding works were secured by way of bond, the very threat of claiming on the bond motivated the developer to complete the works, presumably so as to maintain a good record for obtaining future bonds/funds for future development.  However, this situation has changed in recent years, and attempts are now being made to make claims on bonds in some cases.

The report to the Rathfarnham Area Committee in October 2010 previously advised in respect of the enforceability of the bond for this development. This bond expired in July 2010. 

Legal advice on the enforceability of the bond, (two opinions upon which were sought) confirmed that the terms of the bond made it unenforceable and that the Council could not utilise it to complete works. The Council  would be ill advised to act against extensive legal advice  leading to costly and potentially unsuccessful proceedings in relation to the bond.  The bond is worded to “satisfy and discharge damages sustained by the Council”, (presumably because the intention was to safeguard areas to be taken-in-charge), and the Council was and is not in a position to sustain damages because the development is private property in its entirety, and no part of it will be taken in charge.

In the normal course of events, prior to the expiration of  a bond the Council seeks the extension of the bond from the bond provider. The bond provider, in consultation with the principal (the developer) has generally acceded to the extension of said bonds, presumably on the basis that the developer had the funds made available to meet the annual premium to maintain the bond.  

The bond provider, when threatened with legal action over the bond re-iterated the terms of the bond (“satisfy and discharge damages sustained by the Council”) and did not demonstrate a willingness to release funds given that the Council had not (and could not) incur damages. Any Council proceedings in relation to the bond would undoubtedly have been contested by the bond-holder.  In light of this and the two legal advices, no request to extend the bond was made.

It should however be borne in mind that a bond is an additional protection to that afforded by the normal planning enforcement procedures, and both legal advices advised that enforcement proceedings be utilised to ensure compliance and safeguard the completion of services.  Enforcement is ongoing in this regard.