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GAZETTE
JULY-AUGUST
19
Correspondence
National House Building Guarantee Scheme
19th July, 1978
Dear Sir,
It seems strange that you chose to publish for a second
time the misinformation in the Dublin Solicitors' Bar
Association Comment on the National House Building
Guarantee Scheme. As I was partly responsible for
drafting the scheme, but not of course for policy decisions
about its scope, I feeH should correct'again two serious
errors that may mislead the profession:
1. The Comment says three times that the purchaser
"must show that he had exhausted his remedy against the
builder before he could claim against the Registration
Body". The writers of the Comment found "particularly
worrying" a mythical provision "that the protection of
the Scheme will only become available" and "any
guarantee Scheme only came into effect" after a
purchaser has exhausted his remedies against the builder
which, they say, could take at least eighteen months to
two years.
In fact Rule 28 of the scheme says only that the
purchaser has to show that "any other remedy available
to the Purchaser by legal action is not adequate and
appropriate to the circumstances". There will be cases
where the purchaser has a clearcut remedy in law against
a solvent builder that is "adequate and appropriate to the
circumstances"; there will be many cases where he has
not, particularly if a house is not fully habitable during the
period of any delay in enforcing a remedy, in which case
the purchaser is protected under this Rule.
(It is an interesting comment on the legal system for
which our profession is partly responsible that the
ordinary remedy for defects under a building contract is
recognised by die Association to be so inadequate. No
doubt the Association has been taking strenuous action
over the years to try to improve the remedy).
2. "It is further considered that the form of words used
to preserve Common Law rights should be extended to
provide, not merely that nothing in the Contract
documentation should deprive the Purchaser of such
rights, but that nothing in the Contract" "nor in the
C.I.F. Guarantee Scheme" should deprive the Purchaser
of his rights at Common Law". Apart from the fact that
there is no "C.I.F. Guarantee Scheme" such a provision
would merely reveal the crass ignorance of the draftsman.
It is perfectly clear in law that a guarantee in one contract
that does not purport to do so does not take away the
party's rights for breach of another contract (indeed there
are many decisions holding that such a guarantee even in
the same contract will not take away common law rights
in the absence of clear words). The statement in the
Comment that the guarantee takes away an insurance
company's right to exercise by subrogation the
purchaser's claim for negligence by the builder, is equally
strange.
So that the purchaser will be aware of his rights, the
explanatory notes on the guarantee certificate say
specifically—"The Scheme does not take away your
common law rights or any other rights you may be given
by the building contract. Disputes about such rights, for
example in connection with deifects that are not structural,
date of entry, price, standards of building etc. are not
within the Guarantee Scheme".
May I mention that if the Association is interested in
documents that actually do deprive purchasers of rights,
often in the most inequitable way, they might perhaps
look at some of the building contracts drafted by
solicitors and counsel that are in circulation.
May I also suggest more fruitful action than their
Comments that the Dublin Solicitors' Bar Association
could take in their zeal to protect purchasers of new
houses:
(i) investigate the hours spent conveyancing each house
by the solicitors for builders of large estates,
recording separately the hours spent by qualified and
unqualified staff;
(ii) investigate the extent to which any part of such
conveyancing work actually requiring legal
knowldege is carried out by counsel employed by
solicitors for the builder, and what proportion of the
solicitors' fees are diverted to counsel;
(iii) decide if the opinion of building societies that,
although they are paid for doing so, solicitors for
purchasers cannot be trusted to tell a good title from
a bad one, and therefore must be augmented by a
building society solicitor, is justified;
(iv) consider in what proportion of cases building
societies have to enforce mortgages on new building
estates, in what proportion of such cases there would
be likely to be a defect in title overlooked by the
purchaser's solicitor, even if no building society
solicitor were employed, and consider whether the
risks involved could be more cheaply covered by
insurance than by employment by purchasers of a
separate building society solicitor in every case;
(v) decide if there is by any chance room for im-
provement in the present system of conveyancing,
and if so would it be possible for the solicitors'
profession to do anything to bring that improvement
about;
(vi) in the light of the above investigations, consider
whether the charge per hours work paid to solicitors
in connection with the conveyancing of houses on
new estates with a common title is no more than a
reasonable remuneration for skilled services
rendered, and whether the total 'conveyancing' costs
that attaches to each such house could be at all
reduced.
Should these investigations reveal that some saving on
total conveyancing costs is possible, then of course there
would be little difficulty in devising a scheme by which the
saving is diverted to paying a premium for a system of
insurance against defects that would give the "total or
even adequate protection" which the Association rightly
seeks for purchasers.
Yours faithfully,
MAX W. ABRAHAMSON,
28/32 Upper Pembroke Street,
Dublin 2.
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