SCS Review Winter 2009 Volume 3: Number 4

SCSReview_Winter09_V(q7)Q6

01/12/2009

18:32

Page 1

Winter 2009 Volume 3: Number 4

SCS

REVIEW Doing the Math‌

Budget 2010: SCS pre-Budget submission Economy: ESRI outlook for 2010 Legislation: The Multi-Unit Development

SCSReview_Winter09_V(q7)Q6

01/12/2009

18:32

Page 2

President’s news

Representing members Welcome to the winter edition of the SCS Review, which also marks the halfway point in my term of office.

Since the last edition of the Review was published, the SCS 10th Annual Conference has taken place and I was delighted to see that it was so well attended by over 300 delegates. I was also delighted to see the media coverage that the event generated, including features on both the RTÉ 6 o’clock and 9 o’clock news slots, along with widespread radio coverage and print media coverage the following day. My sincere thanks to all on the committee and to our speakers for their hard work in ensuring the success of this year’s Conference.

Government focus must now turn to stabilising unemployment Following the passing of the Lisbon Treaty and the adoption of legislation to establish the National Asset Management Agency (NAMA), the focus for Government now shifts towards Budget 2010. Despite recent confirmation from the Minister for Finance at the Society’s Annual Conference that the Government’s commitment to the Public Capital Programme will represent a total expenditure of €31 billion until 2013, evidence of this commitment has not filtered down through each of the spending departments. The Society’s pre-budget submission notes that we are facing the prospect of a further dramatic decline in our industry during the first half of 2010 as a number of major infrastructure projects currently on site reach completion. Because of the lack of new orders in the pipeline over the past year, a further 100,000 jobs in our industry are under threat and employment in the construction sector could fall to as low as c.120,000. This number, when considered in the context of the peak, when the industry employed c.400,000, is a terrifying prospect.

In terms of our own profession, the Society’s most recent survey of unemployment has indicated that by the end of this year, 40% of all graduates throughout the country will have lost their job. 8% of SCS Associates and Fellows are also expected to lose their jobs.

I am happy to say that the Society has had some success on the professional fees issue – following significant lobbying by the SCS and the CIC, the Department of Finance has written to us to provide greater clarification in relation to the application of the proposed 8% fee reduction. We will also be meeting with senior representatives of the Department of Finance in the coming weeks to highlight concerns in relation to the inclusion of smaller practices in the markets for public contracts. A number of proposals have already been put forward by the SCS for consideration by the Department. A copy of this submission to the Department of Finance is available to review under the submissions section of the SCS website.

The Society also recently met for the second time with senior executives in NAMA to discuss the role and skill set of Chartered Quantity Surveyors and the positive contribution we can make to the valuations and workouts of projects that come within NAMA’s remit. The Society’s previous meeting with NAMA gave rise to a greater appreciation of the skill set of Chartered Valuation Surveyors and the Red Book basis of valuation, and we are hopeful that the same level of appreciation has been conveyed in respect of Quantity Surveyors.

There is no doubt but that the Society’s increased role in public affairs is yielding benefits. I cannot recall a time in the history of the Society when we were so frequently quoted, called upon for comment and involved in public debate. This of course is a very welcome development and will no doubt continue, but every public affairs opportunity needs to be considered in its own context and on its own merits. Sometimes it is appropriate not to comment and not to become embroiled in a political debate. The Society is after all a professional body and not a representative body, nor is it a trade association.

All members will now have received notice of the forthcoming EGM on December 10 and I look forward to your attendance.

SCS lobbying yields results The Society has been meeting with representatives of the Department of Finance on a bi-monthly basis over the past year to exert pressure and influence Government policy. While the CIC submission of last April for the implementation of a financial stimulus received a positive reaction, the pace of decision-making within the Department remains a source of great frustration. This, combined with the impact of the professional fee reductions of March last and the increasingly disproportionate and inequitable application of public procurement procedures continues to threaten the viability of many small and medium building and civil engineering companies, as well as the manufacturing, services and professional industries that support them.

2 SCSREVIEW

Ken Cribbin President

SCSReview_Winter09_V(q7)Q6

01/12/2009

18:32

Page 3

Contents

06 The Society of Chartered Surveyors, 5 Wilton Place, Dublin 2.

Tel: Fax: Email: Web:

01-676 5500 01-676 1412 info@scs.ie www.scs.ie

EDITORIAL BOARD Chairman:

John Oliver Costello

Board:

Tom Cullen John Minihane Ciara Murphy Paul O’Grady Gillian Reynolds Derry Scully

PUBLISHERS Published on behalf of SCS

by Think Media Ltd Editorial:

Ann-Marie Hardiman Paul O’Grady

Design:

Tony Byrne Tom Cullen Ruth O’Sullivan

Advertising: Paul O’Grady

www.scs.ie

Views expressed by contributors or correspondents are not necessarily those of the Society of Chartered Surveyors or the publisher and neither the Society of Chartered Surveyors nor the publisher accept any responsibility for them.

Henry Tierney (left) receiving his reward from Mike Greensmith for services to LionHeart.

04 10 11 12 13 News

ARM 4; Past-Presidents’ Dinner; LionHeart; YCS Annual Black Tie Ball

Legislation

Clear as MUD – the new Multi-Unit Development Bill

Budget 2010

SCS pre-Budget submission

European news

AEEBC launches EurBE card

Cover story

Report from the SCS Annual Conference

2010 SCS ANNUAL DINNER Bookings for the 2010 SCS Annual Dinner are now being accepted. This popular event will take place on Thursday, February 4 2010, at 7.30pm in the Burlington Hotel, Dublin. It is anticipated that the Annual Dinner will continue to maintain its popularity within the industry, so you are advised to book early.

Tickets are priced at €85.00 per person. If you wish to reserve a ticket, please complete in full the booking

17 18 20 21 22

Interview

Past-President Kevin Callan speaks to SCS Review

Ratings

Adrian Power-Kelly discusses commercial rates

Professional fees

Clarification of the 8% fee reduction for professional services

Economy

The ESRI offers its projections for 2010

Property case reports

Legal

form, which is available to download on the homepage of the SCS website – www.scs.ie – and return with full payment to annualdinner@scs.ie. Alternatively, you can post your booking form along with payment to SCS Annual Dinner, Society of Chartered Surveyors, 5 Wilton Place, Dublin 2. There will be a table available for members wishing to attend the dinner, but who do not wish to bring guests. Please note that the Members’ Table is strictly members only.

SCSREVIEW 3

SCSReview_Winter09_V(q7)Q6

01/12/2009

18:32

Page 4

News

EDITORIAL

Economic watershed The state of the economy is dominating our working lives and it is appropriate that it dominates this edition of the SCS Review.

The excellent article from the ESRI sets the context for our debate, just as Alan Barrett’s contribution at the start of the Conference set the context for that day’s presentations. While all the contibutions were engaging and, at times, very challenging, I took two very clear messages away.

Firstly, the Minister for Finance is absolutely committed to correcting the public finances.

The scale of that correction is a €4bn ‘adjustment’ which is coming in the Budget. While this is largely supported in principle in our industry, it was also clear from Dr Peter Stafford’s contribution that the Government can influence our economy in positive ways, despite the cuts.

The ‘do something’ scenario, taken from the Construction Industry Council’s submission earlier this year, was well outlined by Dr Stafford. So the second message I took away was that if the Government makes the right decision, it can save 70,000 jobs in the construction sector alone, at no cost to the Exchequer.

We are at an economic watershed: we must all take every opportunity to get our ‘do something’ message through to public representatives in general, and the Department of Finance specifically.

John Oliver Costello Hononary Editor

4 SCSREVIEW

SCS Southern Region Annual Dinner The SCS Southern Region Annual Dinner took place on Friday, November 6, 2009, in the Maryborough House Hotel, Cork.

Over 200 guests attended the event, which was hosted by Southern Region Chairman Michael Barrett.

Guest speaker Ken Cribbin, SCS President, gave a speech highlighting the current state of the construction industry and the fact that employment levels in the industry are likely to fall again before they improve. In his speech, Ken told guests that: “At the height of the boom, the construction industry represented 18% of total employment in the economy. According to the Construction Industry Council, the absence of an intervention by way of a stimulus package, combined with the completion of several large projects, means that up to a further 100,000 jobs in construction are under threat in the first six months of 2010”.

Ken went on to speak about the recent graduate survey carried out

At the Southern Region Annual Dinner were (from left): Michael Barrett, SCS Southern Region Chairman; Ciara Murphy, SCS Director General; and, Ken Cribbin, SCS President.

by the Society of Chartered Surveyors and how it highlighted that the south of the country was particularly badly hit, with figures indicating that up to 57% of graduates in the region are now unemployed. The President assured those attending that the SCS is meeting on an ongoing basis with representatives from the Department of Finance to try and encourage them to implement

ARM 4 published On November 2, 2009, the Society of Chartered Surveyors (SCS), in conjunction with the Construction Industry Federation (CIF), published the new edition of the Agreed Rules of Measurement – ARM 4.

ARM 4 will come into effect with respect to tenders issued using the RIAI contracts from February 1, 2010, and all documentation for tenders to be received on or after this date should be measured in accordance with ARM 4.

The CIF/SCS ARM Committee said: “ARM helps to ensure a consistent set of rules for the measurement of building works and embodies the essentials of good practice”. The Agreed Rules of Measurement will

apply to both proposed and executed works. The joint committee is currently working on a supplement to ARM 4 with regard to Public Works Contracts that apply to building works.

Copies of ARM 4 are available from the SCS and the CIF at a cost of €48 (including postage and packaging).

Any queries should be directed to the Chairman of the joint committee for the operation of ARM, Michael Mulryan, Email: mmulryan@bmp.ie.

the stimulus package put forward by the CIC. However, he told guests that the pace of decision making is extremely slow and is leading to great frustration for all involved.

Finally, Ken thanked the members for their support in these turbulent times and encouraged them to remain positive during this “challenging period of overwhelming change”.

€48 incl. p+p

SCSReview_Winter09_V(q7)Q6

01/12/2009

18:32

Page 5

News

SCS Past Presidents’ Dinner The annual Past Presidents’ Dinner of the Society of Chartered Surveyors took place in Wilton Place on Thursday, November 12, 2009.

Some 30 Past Presidents attended the gathering, which was hosted by current SCS President Ken Cribbin.

Addressing the Past Presidents, Ken spoke of how honoured he was to be among such esteemed members, and acknowledged their contribution to the Society over the years. Also in attendance at the event were John Curtin, SCS Junior Vice President, and Ciara Murphy, Director General.

SCS EGM An Extraordinary General Meeting of the SCS will take place on Thursday, December 10, 2009. All members will by now have received the documentation setting out the items for consideration at the meeting. In summary, there are four special resolutions to be considered by the meeting.

The first resolution enables the establishment of the SCS Registration Body as provided under the Building Control Act, 2007. The SCS Registration Body provides for the registration of the use of the title ‘Quantity Surveyor’ and also ‘Building Surveyor’. It does not apply to any other members of the Society. In

Back row (from left): Anthony Leonard; Barry Smyth; David Kelly; Jim Dent; Larry Martin; Derry Scully; Conor Hogan; John Curtin; Felix McKenna; Des Byrne; Brendan Sheridan; John Costello; Bill Nowlan; John Daly; and, Tom Dunne. Front row (from left): Brendan O’Meara; Tom D’Arcy; Kevin Callan; John Bruder; Ken Cribbin; Anne Hargarden; Jim Gahan; and Michael Webb. order to incorporate the SCS Registration Body into the overall structure of the SCS, it is recommended that the SCS Memorandum of Association is amended in the manner set out in the first resolution.

The second resolution provides for notice of all future General Meetings of the Society to be given to members by post or by email. The purpose of this resolution is to ensure the efficient use of the limited administrative resources in the SCS in the future.

The third resolution has been put forward following a general review of SCS membership classes and designations. It is proposed to realign membership classes, attached

classes and corresponding designations as closely as possible to those of the RICS. Arising from the soon to be established SCS Registration Body, it will also be necessary to create a new attached class in order to enable Registered Building Surveyors and Registered Quantity Surveyors, who may not already be in membership of the SCS, to access the services of the SCS. The fourth resolution sets out the proposed membership subscriptions for 2010. The proposal as set out: eliminates the differentiation between employment in the public service or the private sector; reduces the period of discounted fees upon qualification from 12 years to six years in line with the RICS; increases the discount to

CEEC Education Graduate Award finalists 2009 Thomas Stronge of Kerrigan Sheanon Newman and a student of the SCS recently won an award for a research paper he submitted to the CEEC on construction economics.

Thomas was one of three finalists whose research papers had been selected to progress to the final presentation stage in Limassol, Cyprus, on Friday November 6, 2009.

The main objective of the CEEC Education Graduate Award programme is to help promote and foster an environment for graduate research into the application of construction economics-related topics within the EU. Participants hailed from the Czech Technical University in Prague, Dublin Institute of Technology, Dublin City University and the University of Stuttgart.

The students, who were among 11 candidates of varying qualification levels ranging from those undertaking PhDs to those studying for their first degree, all submitted abstracts of their research. These abstracts were reviewed by a CEEC Educational Committee Panel and the qualifying candidates were then allowed to prepare and submit their research papers, from which three

those members who currently have less than six years since qualification from 370 to 310; eliminates the category based on age, which is illegal; creates a flat fee for members who are overseas but who wish to actively retain their membership; and, creates a flat fee for retired or nonpractising members and those who are unemployed. The effect of this proposal on gross membership subscription income to the Society based on the membership as of June 2009 is income neutral.

Members are reminded that in the event that they are unable to attend the EGM, a proxy form may be used to vote on each resolution and should be submitted to the SCS no later than 12 noon on December 10, 2009. candidates were chosen to progress to making a presentation of their work at the CEEC General Assembly Meeting in Limassol.

Topics included: comparison of practices and indeed prices between two or more EU member states; the identification of markets in EU states for construction economists; global issues such as sustainability; and, specific member state issues such as reform of public capital programme accountability within the EU.

SCSREVIEW 5

SCSReview_Winter09_V(q7)Q6

01/12/2009

18:32

Page 6

News

Unemployment survey results

Charity begins at home

Following our previous survey in February 2009 to establish the levels of unemployment among Chartered Surveyors, the Society decided to undertake a further survey of all member practices and companies during the month of September 2009, to identify how the marketplace has changed since the early part of the year and to assess the effect of what the continuing downturn in construction and property is likely to be in employment terms over the next few months. The latest figures are based on the responses of 220 firms all over the country.

Overall figures saw a drop in employment between January 2009 and September 2009 of 12.49%. A further drop in employment levels is expected by December 2009. Employment levels between January 2009 and December 2009 look set to drop by 18.35%. The survey shows that graduate members of the profession have once again been particularly badly hit by the recession, with a fall in employment since January 2009 of 27.25%, with further falls predicted by year end. Among Chartered Surveyors, the Building Surveying Division recorded the highest fall in employment at 7.14%. On a regional basis Connaught, at 10%, recorded the greatest fall in employment among Chartered Surveyors, while Dublin saw the lowest fall at 3.85%.

The information gathered through this survey will assist the SCS in understanding the extent and effect of the downturn, and how best the SCS can assist individual members and member companies during these challenging times.

LionHeart, the RICS benevolent fund, offers assistance to members worldwide.

6 SCSREVIEW

LionHeart is the working name for the RICS benevolent fund, established in 1899 by Robert Vigers, then President of the RICS, to provide support to past and present members and their families who experience unforeseen

difficulties in their lives. It is now a thriving independent charitable company, which is neither managed nor funded by the RICS but is governed by a board of trustees who are RICS members. Barry Smyth, LionHeart volunteer

Award for services to LionHeart

Seated (from left): Brid Clarke; Rosemary and Henry Tierney; and, Mike Greensmith. Standing (from left): David Kelly; Billy Jenkins; Ken Cribbin, SCS President; Edward Lyons; Derek Jolly; Ciara Murphy; Stewart Harrington; Eoin McDermott; Mike Carter; Barry Smyth; Philip Chambers; Paddy O’Donoghue; Peter Stapleton; and, Pat Clarke.

A lunch was recently hosted by LionHeart, the benevolent fund run

by Chartered Surveyors for Chartered Surveyors, at 5 Wilton Place, at which an award was presented to Henry Tierney in recognition of his contribution as a trustee of LionHeart for c.30 years. Henry had also been a volunteer visitor for the fund and many beneficiaries have reason to appreciate his kindness and concern for them. He was a member of the original organising committee of the SCS annual golf outing, which, together with other donations, consistently raises a significant?annual donation for the

charity, making the SCS regularly the biggest contributor to Lionheart on a per capita basis.

The Chairman of LionHeart, Mike Greensmith, Chief Executive Mike Carter, SCS President Ken Cribbin, Officers of the Society, members of the golf organising committee, and Ciara Murphy, Director General, SCS, attended, together with Henry’s wife, Rosemary, Billy Jenkins, representative and trustee in Northern Ireland, and Brid Clarke.

In making the presentation to Henry, Mike Greensmith spoke warmly of Henry’s contribution both locally and as a wise trustee, and

representative in the Republic of Ireland, is a trustee of the charity.

LionHeart depends on personal donations and fundraising events organised by members, corporate support from the property industry, and investment income to raise the £1.8 million needed each year to fund grant-making, advice giving, befriending and counselling services to RICS members and their families world-wide.

Henry made a most gracious response thanking Lionheart for the honor and acknowledging the contribution of all those involved in the golf outing, both committee and participants.

Brid Clarke, the highly regarded artist who has each year painted a watercolour which is keenly fought for as the major prize for the golf outing, presented Mike Greensmith with an original painting, inspired

by Molly Bloom’s soliloquy, to mark his visit.

Prior to the lunch Ken Cribbin, SCS President, Peter Stapleton, Vice President, and Ciara Murphy, Director General, met with Mike Greensmith, Mike Carter and Barry Smyth with a view to discussing ways in which the Society and LionHeart could raise the profile of the charity and attract new beneficiaries. It was reported that currently three members in the Republic of Ireland are receiving regular financial help and contact is maintained with a further four people. LionHeart is keen to identify further members and their families who may be in need of help by reason of bereavement, accident or illness, the separation of families, unemployment, or difficulties in retirement, particularly during the recession.

SCSReview_Winter09_V(q7)Q6

01/12/2009

18:32

Page 7

News

Each year, around £20,000 is raised by members in the Republic of Ireland through donations and events, principally the annual golf outing, which this year raised £8,000. The Society of Chartered Surveyors in the Republic of Ireland received the Company of Chartered Surveyors Award in recognition of fundraising achievement by members in 1990 and 2008.

Benefits Typically, beneficiaries of the charity will have experienced difficulties such as: unemployment; ill health, accident or disability; the separation of families; bereavement; or,

difficulties in retirement. No problem is too great or too small for LionHeart to assist. There has been a growth in the numbers seeking help due to unemployment and from sole practitioners experiencing difficulties in the recession.

Currently, five members in the Republic of Ireland are receiving regular financial help at a cost in excess of £10,500, and the circumstances of a further four are monitored and reviewed annually.

Additional help may be offered to these or new applicants at any time.

All financial help is offered according to need following a confidential assessment of each

applicant’s financial and personal circumstances. Grants or loans can help unemployed people in financial difficulties with daily living expenses: telephone expenses; motoring or travel costs; household insurances; childcare costs or recreational expenses; essential property repairs and maintenance; the replacement of essential household appliances; aids and adaptations for disabled living; assistance with residential care fees or care in the community, including respite care and respite for carers; holidays for those in need of a break; and, gifts and hampers at Christmas. Help may also be offered

with the cost of computer hardware and software, and costs of added training or retraining for unemployed members.

Advice, information, and befriending are freely available to all members from our trained advisors and local volunteers. If you or someone you know needs help, or if you would like to make a donation, organise a fundraising event, or get involved as a volunteer, visit the LionHeart website at www.lionheart.org.uk. Alternatively, telephone 0044 24 7646 6696 and speak to one of our friendly staff. It could be the best call that you have ever made.

Annual Young Chartered Surveyors Black Tie Ball

From left: Shane Caldwell; Yvonne Kiernan; and, Kieran Curtin – YCS Committee.

This year’s Young Chartered Surveyors (YCS) Black Tie Ball took place on Friday, October 30, in the Hilton Hotel, Charlemont Place, in Dublin. This year’s committee (Chairperson Kieran Curtin of GVA Donal O Buachalla; Acting Vice Chairperson Yvonne Kiernan, the Valuation Office; Honorary Secretary Kevin Brady of Andrew Nugent & Associates; and, Honorary Treasurer Shane Caldwell of GVA Donal O Buachalla) went to great lengths to continue the tradition of holding an annual ball.

The YCS would also like to thank the following for attending our event: Ken Cribbin, SCS President;

From left: Michelle O’Flynn; Maeve Furlong; and, Aoife Brennan – Lisney.

Peter Stapleton, SCS Vice President; Ciara Murphy, SCS Director General; Gillian Reynolds, SCS Head of Communications & Events; Zöe O’Connor, SCS Head of Education; Mark Humphries, RICS Matrics Chairperson; Gavin Morgan, RICS Matrics Northern Ireland Chairperson; Greig Adair, RICS Matrics Northern Ireland Chairperson; and Former YCS Chairpersons Richard Mossop, Des Boyle and Colin Cleary.

In his address, Kieran Curtin described how the Young Chartered Surveyors was set up in London 120 years ago. He mentioned that there had been numerous changes during

From left: Cathy Molloy; Louise Nolan; and, Maeve Russell.

that period; however, the core principle remains the same – to support young surveyors starting out in their careers. He encouraged those present to enjoy the night’s event and to look forward positively to the future ahead.

At present, the YCS holds numerous events throughout the year and in 2009 these included: ■ meet and greet night held in April, attended by over 50 people; ■ five-a-side soccer and barbecue held in July, attended by over 100 people; ■ site visit to Lansdowne Road, held in September;

■ Annual Young Chartered Surveyors Black Tie Ball; and, ■ further meet and greet night to be held in December.

The YCS recently set up a facebook page and is in the process of launching a loyalty card for members.

In his address to the annual dinner, Ken Cribbin mentioned that graduates and young surveyors were among the worst affected by the downturn. Mr Cribbin also thanked the younger members for getting involved and encouraged those who were not involved in the YCS to do so.

SCSREVIEW 7

SCSReview_Winter09_V(q7)Q6

01/12/2009

18:32

Page 8

News

Saving water

Mike Norton, Technical Director of Kingspan Water, has called on the Minister for the Environment to ensure that water saving technologies are made compulsory for all new homes, in tandem with any introduction of water charges.

Speaking at the 3rd National Water Summit in Croke Park, he said: “When water charges are introduced, it is absolutely essential that there is a change to the building regulations to ensure that all newly built homes meet specific water performance standards. Such a move would ensure that all new homes have much less impact on the environment and would provide consumers with a way of reducing their water bills by being more environmentally conscious”.

Kingspan Water is a market leading product portfolio from Kingspan Group PLC. It was established in 2009 and is part of the Kingspan Environmental division of the company. The objective of Kingspan Environmental is to offer affordable, environmental solutions for off-mains drainage, rainwater harvesting and fuel storage to meet the needs of sustainable building projects. See more on www.kingspanwater. com/domestic_rainwater_ harvesting.htm.

8 SCSREVIEW

On the move Hugh McAtamney Hugh McAtamney FSCS FRICS MCIARB has retired from the John Paul Group after over 40 years’ service and is offering consultancy services under his own name, specialising in dispute resolution.

Hugh is a member of the Chartered Institute of Arbitrators and is accredited by CEDR as a commercial mediator.

Contact: Hugh McAtamney Baltrasna, Ashbourne, Co. Meath Tel: 086-813 5922 Email: hugh@hughmcatamney.com

John McCarthy & Associates John McCarthy, formerly of Kane Crowe Kavanagh in Tralee, is now in practice in Cork as John McCarthy & Associates Chartered Quantity Surveyors Ltd. Contact: John McCarthy & Associates Chartered Quantity Surveyors Ltd Dromahoe, Dromagh, Mallow, Co. Cork Tel/Fax: 029-78490 Email: info@jmcsurveyors.ie

MacCabe Durney Barnes Jerry Barnes ASCS MRISC has joined with Terry Durney and Fergal MacCabe to form a new partnership

– MacCabe Durney Barnes – offering services in planning, urban economics and design.

Contact: MacCabe Durney Barnes Town Planning/ Urban Economics & Design 56 Fitzwilliam Square, Dublin 2 Tel: 01-676 2594 Fax: 01-676 2310 Email: jbarnes@mdb.ie Web: www.mdb.ie

Murphy Mulhall

Louise Phillips, formerly of Tesco Ireland, has set up in practice trading as Phillips Property, and specialising in all areas of property/asset management, rent reviews, lease renewals, acquisition and disposal work.

Contact: Louise Phillips, Phillips Property Tel: 01-285 6212 Mob: 086-241 7682 Email: louise@phillipsproperty.ie

Robert Murphy and James Mulhall have announced the establishment of Murphy Mulhall, Chartered Surveyors and Property Consultants.

Robert and James were previously Directors at CB Richard Ellis specialising in investment and office agency, respectively, and together have over 30 years’ property experience.

The practice will concentrate on all aspects of the commercial property market, including office agency, investment, valuations, rent reviews and strategic consulting.

Contact: Murphy Mulhall 15 Upper Fitzwilliam St, Dublin 2 Tel: 01-634 0300 Email: jm@murphymulhall.com.

Web: www.murphymulhall.com

studies, present the ‘insider’ view.

The book moves beyond a

theoretical overview and, by illuminating the reality of property partnerships shows, for example, exactly how the Government is procuring schools, hospitals and roads.

This clear and objective analysis sets property partnerships in their economic and political contexts and will be of topical interest to surveyors and developers – in both private practice and local authorities – as well as to funders.

Students in surveying, estate management and real estate development will also find this a concise and authoritative guide.

Phillips Property

Partnerships in Urban Property Development Partnerships in Urban Property Development by Nigel Dubben and Brenda Williams was recently published by Wiley-Blackwell.

The book covers partnerships in the broadest sense, presenting a critical account of the whole range of partnerships in property development. The authors draw on their own professional experience of running property partnerships and, with carefully researched case

ABOVE: James Mulhall and Robert Murphy.

SCSReview_Winter09_V(q7)Q6

01/12/2009

18:32

Page 9

News

HSS Hire Ireland launches AirManager to combat swine flu

Outsourcing SEO Projects

HSS Hire has added another innovative product to its hire fleet.

According to the company, the AirManager unit has been scientifically proven to reduce the risk of contracting swine flu.

AirManager, exclusively available through HSS, sterilises the air by passing it through an active decontamination system, which destroys bacteria, viruses and pollutants and reduces airborne odours. Not only does AirManager have obvious health benefits, it is also cost effective to hire, has a low electrical consumption, can be free standing or fitted into air handling systems, and is unobtrusive in operation.

For further information, please contact your local branch, log on to www.hss.ie, or call 1800 223366.

HSS Hire Service Group is an Ireland- and UK-based tool and equipment hire chain that has been serving big businesses, trade and DIY customers since 1957. 90% of HSS turnover is from business to business activity.

Clockwise from left: AirManager 900 series; 600 series; 200 series; and, unit used in the classroom.

For more information, please visit www.coburnbrothers.com/search or call Noel Coburn, Tel: 01-236 0076, or 086-810 3176.

Obituary Michael Doris

The surveying fraternity was sorry to learn of the recent death of Michael Doris, a long-standing member of the Society.

Originally from Cookstown, Co. Tyrone, where his father and brothers were well known solicitors, Michael graduated from Trinity College. He worked with Osborne King and Megran, which was at the time the largest professional estate agency in Belfast. He always worked in the commercial side of the business, which was headed up

Dublin-based internet marketing firm CoburnBrothers.com (also known as PraxisNow), has unveiled ‘Outsourcing SEO Projects’ – a unique online elearning product for business people. The first of its kind anywhere in the world, the product is aimed at organisations of all sizes that wish to reap the benefits of organic search engine placement using the SEO (search engine optimisation) services of third parties.

“Most organisations are aware of the huge potential of using search engine placement to attract more visitors to their websites and increase sales.

However, many smaller companies are inhibited by the cost of staffing, equipping and training people, as well as keeping them up to date with the fast moving world of internet marketing,” says John Coburn.

by the ebullient partner Joe Whelan, who no doubt taught him much. In 1966 he transferred to the firm’s new Dublin office and after

about three years left to join the newly established practice Keane Mahony Smith (Denis Keane, Denis Mahony and Des Smith had

previously worked with Michael in Osborne King and Megran). Years later, after a brief period of lecturing in Bolton Street, Michael chose to go the route of the sole practitioner, building up a good list of loyal clients.

Michael was an accomplished piano player and had a great sense of humour. In his younger years he was a top class oarsman and a member of the Bann Rowing Club.

No doubt he was as popular and well liked in those days as during his time in Dublin.

Michael Doris was 75. The Society extends its sympathy to his widow, Mary, and their two sons, Des and Matthew.

SCSREVIEW 9

SCSReview_Winter09_V(q7)Q6

01/12/2009

18:32

Page 10

Legislation

Clear as MUD PAT MCGOVERN discusses how the Multi-Unit Development Bill will affect building surveyors, and presents some suggestions to improve it.

The recent IPFMA conference, ‘Seeing through the MUD’, examined the proposed Multi-Unit Development (MUD) Bill and its implications for residents’ associations, managing agents and building surveyors. My particular area of interest is that of snagging and making good defects ahead of handover of a development from the developer to the owners’ management company (OMC).

Snagging problems can be divided into the following headings: ■ genuine snagging items – must do snagging; ■ desirable snagging items – negotiable with the builder/developer; and, ■ breaches of building regulations due to: poor workmanship; or, inherent design issues.

At present snagging and the completion of developments, and in particular common areas, is a nightmare for the building surveyor, developer and management company agent. Problems with the current system of snagging and how it impedes completion of snagging and handover include: ■ snags are currently carried out one to two years after a development is fully occupied; ■ there is confusion as to whether the ‘snag’ falls into the category of: design; workmanship; or, management company issue; ■ the building control system of self-certification is not working; ■ there is generally no professional

10 SCSREVIEW

supervision on site during construction; ■ certificates of compliances are often issued carelessly; and, ■ Homebond is not adequate in terms of multi-unit developments.

So when the building surveyor gets to the site he is not welcomed with open arms; the builder has had an 18- 24-month professional-free period. The building surveyor is faced with what the builder has perceived to be compliant, or ‘the way we always did it’, or ‘it’s done in accordance with good building practice’.

When a snag list is prepared by the building surveyor, the builder completes about 20-30% of it. No amount of revisits and/or discussions with the builder will improve that. Eventually, both management company and the building surveyor are worn down and in time the transfer takes place with a hugely onerous outstanding snag list. That sets the stage for early expenditure of any sinking fund and very often 10 years into a development, residents are finding out the cost to re-roof a block in a development or in some cases a complete development.

The developer has no respect for the building surveyor, no respect for the management company agent, is not afraid of the local authority, and will not retain his own architect to do supervision.

We as building surveyors wholeheartedly welcome this MultiUnit Development Bill 2009.

However, we see room for improvement in the following areas:

Pictured at the recent conference were (from left): Toal O’Muir, architect; Siobhan O’Dwyer, IPFMA; and, Pat McGovern, McGovern Surveyors.

Section 2 – Transfer prior to sales This concept is good but concerns remain about the mechanism for completion of the snags. We would call for an agreed snag list to form part of any handover/legal documentation. This should go further to include a ‘cost to complete’ and a ‘duration to complete the works’. Perhaps the first round of snagging should be completed prior to transfer and this could open the way for a Scott schedule to be prepared in terms of snagging – where both sides include comment. That way potential problems are highlighted early on in the process.

Section 9 – Determination of developer’s beneficial interests The bill proposes “as soon as is

practicable” – well we are not going to be much further on! It is also to be made with the consent of any mortgagee. Does this mean it can be made without the consent of the OMC? No conditions are imposed on the developer regarding snagging, certification, etc.

Section 11 – Right of management company to effect essential repairs We welcome this provision but would be concerned about recovering costs from the developer going forward. Often, the cost of repair works are significant and the LRC’s recommendation that the OMC would hold back a percentage of the purchase money for each apartment in trust for the developer until complete is a good idea.

SCSReview_Winter09_V(q7)Q6

01/12/2009

18:32

Page 11

Budget 2010

SCS pre-Budget submission Ahead of the much-anticipated Budget 2010, the SCS has made its submission to the Minister for Finance.

There is no doubt but that the Government faces tough decisions in this Budget as it leads the country through an increasingly challenging economic period. The SCS pre-Budget submission addresses issues of concern in both the construction and property industries, and makes a series of recommendations for consideration by Government.

provide effective financial incentives for property owners to carry out energy efficient measures on their existing building stock and will act as a means to boost the depressed labour and construction market, as well as contributing to the sustainability agenda by promoting energy efficient measures.

Energy efficiency CIC recommendations One of the recommendations set out in the submission is the implementation of Construction Industry Council (CIC) proposals as set out in its submission of April 2009, ‘Jobs & Infrastructure – A Plan for National Recovery’. The report recommends that Government provide investment in infrastructure equivalent to €5 billion per annum for three years in order to save 70,000 jobs while at the same time improving overall economic performance and competitiveness. The source of part of the funding suggested is a combination of private pension funds and other ‘off balance sheet’ structures. The CIC solution will help to manage the continuing rise in unemployment in the construction industry, maintain highly skilled productive resources in Ireland, and provide badly needed public infrastructure at excellent value for money.

Capital spending and VAT The SCS submission also recommends that Government departments’ capital spending allocations should be fully implemented in order to take advantage of the excellent value for money as evidenced by the 17.3% reduction in tender prices over the past 12 months.

It is also argued that consideration should be given to reducing VAT rates in construction to stimulate activity in this sector. Applying reduced rates will

The SCS submission recommends that occupiers or owners should be enabled to offset up to 50% of their rates bill on selected designated capital upgrade works to their properties. This proposal would encourage investment in obsolete property, thereby reducing CO2 emissions, while also stimulating employment within trades and material suppliers involved in the upgrade works.

The expansion of the Home Energy Savings Scheme and an increase in the number of grants available should also be prioritised. The Home Energy Saving Scheme – administered by Sustainable Energy Ireland (SEI) – provides grants to homeowners interested in improving the energy efficiency of their home in a bid to reduce energy use and costs as well as greenhouse gas emissions.

Some of the other areas addressed in the submission include: ■ the need to widen the tax base following a lengthy period of overreliance on stamp duty taxes; ■ the introduction of an annual property tax in a fair manner; ■ a lower rate of stamp duty for residential investment property; ■ a lower rate of stamp duty on commercial property; and, ■ a modest increase in the rate of CGT on the windfall gain on lands that materialise due to improved rezoning from a particular date.

A full copy of the SCS pre-Budget submission is available on the Society’s website – www.scs.ie.

SCSREVIEW 11

SCSReview_Winter09_V(q7)Q6

01/12/2009

18:32

Page 12

European news

AEEBC launches EurBE card ROBERT PATTERSON introduces the new EurBE card, which will facilitate professional recognition across Europe.

The AEEBC (Expert Européen du Bâtiment et de la Construction) was formed to facilitate the promotion of the building surveying and construction professions in Europe and the exchange of experience and information between professionally qualified building surveyors and construction experts. It represents the professions’ interests to the European Commission and other European institutions. It was also formed to promote the building surveying and construction expert professions throughout Europe. To date it includes 17 organisations from 14 member countries, which range from Finland in the North to Italy in the South. It is estimated that this represents an overall membership in excess of 350,000 across Europe. The SCS was a founder member of the AEEBC and is represented in all policy and innovations within the organisation.

On September 30, 2005, the new EU General Directive 2005/36/EEC on the Mutual Recognition of Professional Qualifications became law. This is intended to facilitate migration between EU Member States by waiving compensation measures where possible. The mechanism for effecting this is the establishment of ‘Common Platforms’.

In pursuit of these aims, AEEBC maintains a register to which individuals may be admitted provided they meet the specified minimum requirements. The purpose of the Register is: a) to facilitate the movement of practising building experts/surveyors inside and outside the AEEBC gambit and to establish a framework of mutual recognition of qualifications in order that building experts/surveyors who wish to practice outside their country can carry with them a recognition of capability; b) to give sufficient data about the information of the individual building experts/surveyors for the benefit of a prospective employer; c) to encourage a continuous updating of the quality of building experts/surveyors by setting, monitoring and reviewing standards; and,

12 SCSREVIEW

d) to provide a source of information about the great variety of formation systems in member countries.

Concept Educational and professional systems in Europe vary considerably. Their value is judged by AEEBC by the professional competence of the building experts/surveyors who emerge from them. Differing systems can co-exist.

EurBE As a result, and in examining each country’s professions and competencies, it was agreed that the AEEBC would develop a professional card or designation (EurBE) that would be indicative of the holder’s professional experience and qualifications. To facilitate this, the AEEBC has developed a professional card (EurBE). This will be available to qualifying members of each country association making up the AEEBC. It is intended then that those who hold the EurBE will be facilitated through appropriate recognition by the member organisations in each of the European countries they represent.

The initial phase is due to be launched in January 2010. It will be web based and all applicants will need to be approved by their national monitoring committee and thereafter by the European monitoring committee. On acceptance the applicant will be issued with a professional card and add the designation EurBE to their letters.

For further information please go to www.aeebc.org.

Robert Patterson FSCS FRICS Dip Arch Tech (RIAI) Robert is a Chartered Building Surveyor, and is Honorary Treasurer and SCS Rep at the AEEBC.

SCSReview_Winter09_V(q7)Q6

01/12/2009

18:32

Page 13

Conference report

Staying afloat SCS Review was present for the very well-attended SCS Annual Conference at the O’Reilly Hall in UCD in October. PAUL O’GRADY reviews the presentations on the day.

The first speaker of the day was Economic and Social Research Institute (ESRI) economist Professor Alan Barrett, who presented the Institute’s analysis of the current state of the economy and the likely outlook. This analysis is reported in greater detail in Alan’s excellent article on page 21 of this edition; however, below are the essential points.

“In Ireland in 2009, GNP is down by 8.5% and we are projecting that it will be down another 1.5% in 2010. The first half of the year will be negative, but the second half may see minor growth. Planned Budget savings of €4bn will have a recessionary effect, and we expect unemployment (12.2% in 2009) to peak at 15% in 2010. The Budget deficit will be 12.9% this year and 12.8% in 2010, but it will be 16% if the €4bn savings are not found,” said Alan.

Based on these measurements, Prof. Barrett said the ESRI believed that the Government’s plan to cut €4bn is the correct policy decision. In the1980s the same problem was diagnosed, but the adjustment was delayed, so spending was delayed. “On account of making that argument, we have been accused of being cheerleaders for the Government and that is an uncomfortable position. However, our assessment is that cutting €4bn is critical to prevent short-term unemployment turning into long-term unemployment, so pay cuts across the Irish economy are necessary to achieve a more rapid return to growth. In the past, we would have devalued our currency, thereby causing real wages to fall, but now we must cut nominal wages.”

Minister in determined mood The Minister for Finance, Brian Lenihan, opened his address by saying that the Lisbon Treaty vote was the first of three key events for the country. The second was the NAMA legislation and the third was the Budget. He said that following the unprecedented growth from the 1990s into this decade, and an alignment of living standards with our European neighbours, Ireland’s cost base got out of line. “The economy has contracted sharply, so we have to make an adjustment, and if we do, we will return and prosper.”

He said that internationally everywhere had been affected by the world banking crisis with the exception of Canada and Spain. “Everywhere there was excessive lending. And everywhere symptoms vary, but the cause is the same. This problem is not unique. The last global crisis was in 1929. The banks were allowed to collapse and unemployment went to 33% – that’s why banks are not being allowed to collapse.” Interestingly, he said that the decision to let Lehman Bros collapse is now considered to have been a disaster. “We will take action to ensure that borrowing and debt are kept within sustainable levels. Too much debt would mean that by 2012, 66% of income tax would go to service debt. In the 1980s we didn’t tackle the problem and we went to the brink of ruin. If we tighten our belt now, we will recover rapidly. The goal is a deficit of 3% by end of 2013. If we don’t take action, we won’t get our confidence and our economy back. We can come out of this and we will.”

Turning to the construction and property sectors, the Minister said: “Construction is very, very difficult. We saw an unsustainable bubble and it will take time to return. It has been a difficult period but we can do things.

We can sustain capital expenditure and that will be done. There have been significant improvements in infrastructure. Five per cent of GNP in 2009 went to capital expenditure. This is complemented by other investments such as those by the ESB and the Dublin Airport Authority. Meanwhile, improvements in public transport continue – in our roads and the LUAS extension for example. Tender prices have come down and that is a big help to what the envelope can achieve. We are reviewing capital expenditure but I think it is important to sustain our level of investment, which is likely to be 4% per year over the years of the Government”.

He said that there are considerable signs of hope in the economy. “The workforce is great – only Sweden has more graduates. It is a very flexible workforce. There was a 6% improvement in our competitiveness this year.

We were the only country to reduce wages this year. We should be proud of our strength and our resilience.”

SCSREVIEW 13

SCSReview_Winter09_V(q7)Q6

01/12/2009

18:33

Page 14

Conference report

Minister for Finance Brian Lenihan TD addressed the Conference.

Speaker Mark Cunningham.

Speaker Dr Peter Stafford, Research and Policy Development, CIF.

SCS President Ken Cribbin speaks to Alan Barrett, Research Professor, ESRI.

Concluding, the Minister said: “Staying Afloat is an appropriate theme for your Conference. We have done it. Some commentators questioned our ability to do that. Would we be like Iceland? No, we will redevelop our economy and make it an example to the rest of the world”.

Outlook for construction in 2010 Dr Peter Stafford of the Construction Industry Federation (CIF) said that he wanted to begin where the Minister left off and look at the outlook for the economy. What the Minister does, he said, will determine what happens to the construction industry. He presented two scenarios: ‘do nothing’ versus ‘do something’.

Construction is very open to sentiment and the human cost of the falls from 2008 to 2011 will be huge: “There is not much point in having an educated workforce if they are all queueing for a flight to work on construction sites abroad. In the past, we were slighty on catch up in all other areas of construction, but our housing boom was so great as to be distorting figures in Europe. Now, housebuilding has collapsed. In 2009, a totally new house building industry is emerging”.

He continued: “Private investment has left the construction sector. For the first time ever, Government spend is going to be more than 50% of spending in construction. That means the Government is disproportionately important for construction. The capital expenditure programme written in a different era has already been cut back. Compared to the National Development Plan,

14 SCSREVIEW

Ciara Murphy, SCS Director General, greets Minister for Finance Brian Lenihan while SCS President Ken Cribbin looks on.

Speaker Peter Stapleton, Managing Director, Lisney.

Richard O’Dwyer (left), Melissa Berigan, and Brendan Siney of Gold sponsors MARSH with SCS President Ken Cribbin.

€17.2bn has already been cut. Employment in the sector was 400,000 at its height. That’s going to decline to about 100,000 by 2011.”

“This is the point at which the CIC stepped in and asked: what can we do about this? How big should the industry be? We know it was too big. In 2009 we are going to undershoot the optimum level and will do so for future years if we do not correct the situation.

“The CIC has a vision: to save 70,000 jobs over the next three years, maintain highly skilled productive resources in Ireland and deliver necessary infrastructure at excellent value for money for the public benefit with minimal additional State borrowings.”

Dr Stafford said: “We need to finish infrastructure over next three years.

Can we use private investment? Could we keep pension funds in Ireland? To save 70,000 jobs we need to invest €5bn. However, the cost of doing nothing is €2.6bn; therefore, investing €5bn has a net cost of only €2.4bn to the State”. He set out the scenarios (see Figure 1) and explained the impact of the intervention (see Figure 2).

His conclusions were pointed: ■ construction should be 15% of our GNP; ■ some re-adjustment in the industry was inevitable; ■ in 2010 and 2011, we will undershoot the optimum size of the industry; ■ there will be more job losses; and, ■ there are things we can do to prevent that.

SCSReview_Winter09_V(q7)Q6

01/12/2009

18:33

Page 15

Conference report

From left: Keynote speaker Alan Dukes; SCS President Ken Cribbin; and, Professor Brian Lucey, Associate Professor of Finance, TCD.

From left: Caroline Bracken; Sarah Coyle; and, Ciara Horgan.

FIGURE 1: Scenarios Do nothing

SCS President Ken Cribbin with Master of Ceremonies John Bowman.

FIGURE 2: Do something: infrastructure bonds

Do something Stimulus package

€5bn

Stimulus package Job losses in construction Induced employment effects Total job losses in Ireland

€0 50,000 20,000 70,000

Stimulus package Jobs saved in construction Induced employment effects Total jobs saved in Ireland

€5bn 50,000 20,000 70,000

Social welfare costs (€18,254 per person)

€1.3bn

Social welfare savings (€18,254 per person)

€1.3bn Total avoided cost

€2.6bn

Total tax lost (€18,458 per person)

€1.3bn

Total tax take (€18,458 per person)

€1.3bn

Net additional cost

€2.4bn

Total avoided cost

€2.6bn

Funded by Private Pension Funds

Net cost of €5bn stimulus

€2.4bn

Total jobs created

70,000

Social welfare saved

€1.3bn

(€18,254 per person)

Total cost of doing nothing €2.6bn

‘Staying afloat’ is too negative Mark Cunningham, Managing Director, Bank of Ireland Private Banking, opened by saying that he thought the theme of the conference (Staying afloat in uncertain times) was too pessimistic. He continued: “I think times are a lot less uncertain. We need to start thinking about swimming and sailing again. We know what is happening on NAMA. The Minister spoke about what he is going to do. We know what is going to happen in banking. If we get though the Budget, we should have a more confident Government.

“We are in a much better position, with more certainty, than we were 12 to 15 months ago. We are on safer ground than we have been recently. Very little credit has been given to the Government and the civil service about the significant readjustment in Ireland.”

The biggest problem caused by lack of confidence, he said, was the absolute collapse in consumer spending. “The December 2006 peak of SSIAs saw us full of pent up optimism. Now, €12bn more has been saved

by Irish consumers than in December 2006. We are saving ourselves into recession. The key challenge today is to try to demonstrate that we have some confidence in the future; if we can do that, our rebound will be significant.”

Turning his attention to NAMA, he said: “There is a lot of anger about NAMA, but in time, commentators will reflect on the rescue of the economy through NAMA. Ministers will be feted internationally and asked:

(€2bn) and EIB

€2.4bn

Ken Cribbin with Carol Hunt of sponsors Paramount.

how did you save your economy?” On the banks’ relationship with businesses, he said: “We are open for business. We recognise the role we have to play and have lending this year to small business of €1.5bn. We need to make money and we have eased our liquidity issue”.

On how loans that are in difficulty at present will be treated, he said: “That depends on your relationship with the bank. You must recognise that if the bank has all the risk, the bank will act. They will take some share or a significant share of the upside. If the value of the asset has fallen so that loan-to-value convenants have been breached, that means the bank owns the property”.

He said that in banks that are open, there is a competitive war for deposits in Ireland and until deposit prices come down, loan prices will go up.

“There is €104bn in personal household deposits. Eventually we will begin to see a return to normal risk–reward investing.”

International opportunities for Irish construction companies Dermot Reidy, Development Advisor – Construction Services with Enterprise Ireland, gave an excellent outline of international opportunities for Chartered Surveyors. He identified the growth markets as being Brazil, Russia, India and China (BRIC), as well as the Middle East and North Africa (MENA), and gave an overview of how Enterprise Ireland can assist firms and professionals to enter these markets. Perhaps the most significant comment was that the greatest construction opportunity lies in the infrastructure markets of

SCSREVIEW 15

SCSReview_Winter09_V(q7)Q6

01/12/2009

18:33

Page 16

Conference report

developing countries. In fact, project growth in the global construction sector for the period 2008-2011 ranges from a 3% decrease in the USA to an 11% increase in China.

Dermot said that the minimum requirement from a company for consideration

by Enterprise Ireland for assistance in export markets is a turnover in excess of €1m and more than 10 employees. Applicant companies should also be able to provide audited accounts and a viable business plan. Companies of a smaller size than this should typically look to their Local Enterprise Board when seeking assistance.

The perfect storm Michael Mortimer, Senior Risk Manager with Travelers Insurance Company, described the current situation as the perfect economic storm, the once in a 100 years storm with property at the centre. He cited the origins of the storm as being: ■ cheap credit; ■ the step change from depositor to money market funding by banks; ■ a pass the parcel approach to securitisation; ■ speculative money pouring into property; ■ lax banking regulation and supervision; ■ quest for expansion overriding prudence in credit control and risk management; and, ■ sub-prime mortgages.

He gave examples of distressed property assets in Paris, Boston, Kilkenny, and London. He also said that while the UK desperately needs to do something about the commercial property loan books in its banks, sterling had effectively devalued (from 67p/€ to 99p/€ in a year).

Addressing NAMA, he said that it is taking on 21,500 loans to 2,000 customers, totaling €77bn, and the average loan-to-value ratio is approximately 77%. Michael felt that the due diligence on these loans may throw up some interesting items.

He quoted Deputy Alan Shatter, who said: “Assessing long-term economic value in these circumstances is a journey into the unknown worthy of the Starship Enterprise…”

The current market and competitiveness Peter Stapleton, Managing Director, Lisney, opened his remarks by saying: “Surveyors are resilient and the recovery will come. The role of the Chartered Surveyor is always changing. In the 1970s things were bad but the scale of the current problem has never been seen before”. Additionally, to illustrate the scale of the problem, he pointed out that even in 2009, Grafton Street is the ninth most expensive street in the world. “Not many can answer the question of why it is so expensive. It is still crazy – we completely overshot the runway. There are nine premises on Grafton Street now vacant and a massive adjustment is on the way.”

Turning to the residential property market, he said it was “completely overdone. There were many agents supporting massive demand. The type and location of product was wrong – residential output was really an oversupply of apartments”. Having reviewed the setting up of NAMA, Peter turned his attention to competitiveness. “From October 2000 to 2009, Ireland’s competitiveness (as measured by harmonised indicators) fell by 36.8%. While the private sector has responded very quickly, rent falls will also help competitiveness.”

16 SCSREVIEW

Finding global solutions Alan Dukes, Director General of the Institute of International and European Affairs, public interest director on the board of Anglo Irish Bank, and former Government Minister, reminded the audience that all ideas about how to rebuild the economy are theoretical until they are put into effect, and he cited the recent publication of the draft business plan for NAMA as an indication that things are moving from the theoretical towards the actual.

He spoke about the changing skillset that will be required in financial institutions, emphasising the need for the “recruitment of capacities and expertise”, particularly among those working for and with NAMA. Mr Dukes spoke about the role of financial regulatory systems, in Ireland and abroad, and said that Ireland was not alone in having difficulties. “Global problems require global solutions”, he said, adding that although we caused our own problems, the international situation makes it very difficult to solve them.

He highlighted proposals that he felt would help to improve the situation, including: a period of ‘over-regulation’, for example, new and more restrictive rules on securitisation; no new financial instruments or products on the market without prior regulatory approval (no matter how long that takes to obtain); stricter accounting rules on assets moving off balance sheets; and, limits on diversification of activities in a given institution. He concluded by saying that any forecast for the economy would very much depend on how well NAMA and other policy decisions progress.

Is NAMA the only game in town?

This was the question posed by Professor Brian Lucey, Associate Professor in Finance at TCD. He discussed his well-reported “misgivings” about NAMA, and questioned whether the public’s (and the Government’s) interpretation of its role was correct. For example, why should we expect NAMA to make a profit? He did, however, say that if NAMA is the chosen approach, then we need to make it work.

In answer to his central question, Professor Lucey stated that NAMA is not the only game in town, and listed alternatives, including suggestions by Fine Gael, Patrick Honohan, and economists. He criticised the Government for not asking Irish-based economists for their input, pointing out that as public service employees he and his colleagues were a free resource, and were more than willing to contribute.

He praised Minister for Finance, Brian Lenihan, but criticised the skillset at the Department of Finance, where a lack of experience in the private sector, and a lack of fourth-level economics and finance qualifications were, he felt, huge stumbling blocks to understanding the current situation.

In conclusion, Professor Lucey emphasised the need to ‘clean’ the banks, avoid re-igniting the credit boom, and learn from regulatory mistakes. He said that Ireland must work hard to slowly build the economy without ‘bubbles’, and to rebuild our reputation. We need to have an open mind and admit that we don’t have all the answers.

Paul O’Grady Paul is a journalist with Think Media.

SCSReview_Winter09_V(q7)Q6

01/12/2009

18:33

Page 17

Interview

Plus ça change ANN-MARIE HARDIMAN spoke to former SCS President Kevin Callan about his career and his impressions of the current economic situation.

When Kevin Callan joined the Irish branch of the Royal Institute of Chartered Surveyors (RICS) as a Bolton Street student in 1949, there were approximately 100 Irish members, including students. In those days it was difficult for a graduate quantity surveyor to find permanent work, and Kevin completed a series of short-term contracts before joining Dublin Corporation.

He later joined John Sisk and Son as a Chartered Quantity Surveyor, and became a director there in 1964.

When asked whether the industry has changed much over the years, he says that, apart from the obvious enormous increases in scale in recent years, the “same old problems” exist. This is particularly evident when he speaks of his period as SCS President from 1983-’84. “At that time, construction was down 60%, and there were 800-1,000 job losses every month. There were 100,000 people in the industry, and 50,000 of these were unemployed.”

In another echo of current events, graduates fared particularly badly, with little or no prospect of employment, and emigration levels were high. Kevin points to the cyclical nature of things – “It’s ‘plus ça change’,” he says. He does, however, feel that this recession is worse than those that went before.

“We were coming from a much lower base then, so this time the hit was greater.” On the massive growth in the industry, Kevin agrees that there may have been “too much growth too quickly”.

“At the annual dinner in the year I was President, there were 400 people, which was regarded as a very good attendance, from a membership of about 1,500. Last year there were 1,500, from a membership of over 3,000.”

The downturn in the 1980s “affected everyone”, says Kevin, but there were options available. Companies and individuals pursued opportunities in the UK and Africa. “They just got on with it. There were a lot of redundancies, but foreign contracts kept people in employment”.

Even now, he says, there is still work out there, particularly in countries such as Dubai and Canada, and companies are pursuing it. “Professional and construction firms are still going abroad, trying to get into various markets globally, and they’re succeeding to an extent.”

During his career, Kevin served as an external examiner in Bolton Street, and was actively involved in both the Master Builders and the Building Liaison Committee. After his retirement from Sisk in 1991, he worked for several years in arbitration and until two years ago was still carrying out consultancy work. This varied career puts him in an excellent position to offer advice in the current downturn: “There may have to be redundancies, but you should keep your key people as long as you can. Business is cyclical, and you have to be optimistic.”

“On the professional side, quantity surveyors should look at specialisation,” he says, “for example in IT, or mechanical/electric. There will always be specialist work.”

As far as the construction industry is concerned, he agrees that things will probably not regain the heights of the boom, and says that he thinks the industry will take three to five years to stabilise, although the housing market may take longer. In the mean time, companies must “go in at low figures, tender your way in, and keep people at work until things turn around”.

Ann-Marie Hardiman Ann-Marie is a journalist with Think Media.

SCSREVIEW 17

SCSReview_Winter09_V(q7)Q6

01/12/2009

18:33

Page 18

Ratings

Commercial rates: where to from here?

December is coming and the valuation list will be putting on weight, says ADRIAN POWER-KELLY. The general revaluation of all commercial properties in the Fingal County Council area is due to be published in December 2009 in time for the 2010 local financial year, but what is involved and what is the likely impact?

At present total rates revenue for local authorities in Ireland is approximately â‚Ź1.25 billion, representing some 26% of their income. Rates payable by businesses in the Dublin City and County areas alone total some â‚Ź620 million, raised from approximately 43,000 properties. For occupiers, rates represent approximately 13-17% of occupation costs. Depending on your perspective this is either an important revenue stream for local authorities or a significant cost for businesses, particularly in the current economic environment.

Consolidation of the law Prior to the enactment of the Valuation Act 2001, rating practitioners and the Government Valuation Office were operating under legislation that dated back to the 1850s, in the form of the Valuation (Ireland) Act 1852. At a basic valuation level the legislation was satisfactory. However, the fact that there had been no general revaluation of properties throughout the state since the 1850s was a problem – rateable valuations no longer equated to the notional market rental value, which was what the 1852 Act required (it is interesting to note that in Northern Ireland the 1852 Act still applies but they have undertaken general revaluations on a regular basis, thereby avoiding the problem we encountered).

Following numerous submissions to Government throughout the 1980s and 1990s by business groups and the Society of Chartered Surveyors, the Valuation Act 2001 was enacted in an effort to rectify some of the problems and put the issue of a general revaluation on a modern statutory footing.

The 2001 Act is consolidating legislation that updates the system by which rateable valuations are assessed, including changes to the appeal procedures, fees for appeals, provisions for general revaluations of commercial properties and global valuations of electrical/gas/communications networks. However, the requirement that the rateable valuation should equate to the notional market rental value

18 SCSREVIEW

(known as the net annual value) on the specified base valuation date remains. In particular, the original definition of net annual value has effectively been kept without alteration, i.e., the annual open market rental value for the property as it stands at the relevant valuation date assuming a full repairing and insuring lease.

Having updated the legislation, the next move was to start the general revaluation of all commercial properties in the state and the Government Valuation Office commenced this task in 2005. However, rather than undertaking a nationwide revaluation, it was decided to roll out a revaluation on a county by county/local authority by local authority basis. The first local authority area to be chosen was South Dublin County Council. While the task in South Dublin was started in 2005, it was not effectively completed until the end of 2008 when the majority of appeals to the Valuation Tribunal were either agreed or determined. Out of some 6,000 properties valued, there were 725 first appeals lodged to the Commissioner of Valuation and 227 appeals to the Valuation Tribunal. The next counties to be targeted for revaluation are Fingal and Dun Laoghaire-Rathdown, with proposed publication dates of December 2009 and December 2010, respectively.

Valuation Office resources On the basis that we are heading into 2010 with a general revaluation fully completed in only one county council area, there must be concerns that the Valuation Office needs additional resources in order to complete a general revaluation of all local authority areas throughout the entire country. The Revaluation Unit has only been permitted a maximum number of 30 contracted valuers, whereas Section 25 of the Act states that a general revaluation of commercial properties in a local authority area should be revisited at intervals of not less than five years or more than 10 years, in which case South Dublin will again be due for a general revaluation between 2012 and 2017. It remains to be seen how the Valuation Office will be able to adhere to the requirements of Section 25 and still continue with the rollout programme for those counties that have yet to be dealt with.

SCSReview_Winter09_V(q7)Q6

01/12/2009

18:33

Page 19

Ratings

liability is redistributed and rebalanced between different property types and the Act provides that local authorities cannot benefit from a financial windfall after a revaluation has been completed. Section 56 of the 2001 Act states that the total income from rates shall not exceed the previous year’s rates income adjusted by the change in the Consumer Price Index (CPI). This seemed sensible in a time of inflation but it remains to be seen what will happen in, say, the Fingal County area in 2010, bearing in mind that we are actually in a period of deflation where the CPI shows an annual decrease of 6.5%.

There is no doubt that both the 2001 Act and a general revaluation are needed, but as time marches on and questions arise about the likely outcome of this process we need to ask: ■ how can overall equity be achieved?; ■ when will the revaluation be fully completed?; and, ■ where to from here?

Adrian Power-Kelly FRICS, FSCS, ACI. Arb, MIPFMA

Valuation date As regards the assessment of rateable valuations on commercial properties, to date the statutory valuation date has been September 30, 2005, i.e., approaching the peak of the market in 2006/2007. However, as we are all too well aware, the economy and market conditions in 2009 are vastly different. This affects not only rates as an occupation cost for businesses but also a potential inverse ratio where the current market rental value can be below the rateable valuation of the property – a position that could intensify as time progresses. Many clients are already having difficulty getting to grips with the new system but when they look at the proposed rateable valuation vis-à-vis the current market rental value, they can become even more mystified. If the current position obtains, whereby September 2005 continues to be adopted as the statutory valuation date in each county, the position is likely to become even more confusing as time proceeds and trading conditions differ from those that dictated the market in 2005. If alternative valuation dates are specified, then a situation will arise where two properties on different sides of the same street will have different market conditions and economic circumstances determining how the rateable valuation is assessed. At its extreme, a property straddling a local authority boundary could have half the unit valued as at 2005 and half valued as at, say, 2010!

Another issue is the ratepayer’s ability to pay. Experience in South Dublin was that retailers experienced increases in their rates liability of around 80%, while industrial units saw a mix of winners and losers. The ratepayer has a limited pot of money from which to pay rent, rates and service charge. As rates increase the ratepayer will inevitably argue that the residual available to pay rent or service charge must decrease. This is all the more relevant as the debate on upward only rent reviews continues.

During better times many businesses paid little attention to their rates liability but now that trading conditions are difficult they are scrutinising all their expenses and questioning the rateable valuation. However, the Act is restrictive about allowing an existing rateable valuation to be revised where the statutory appeal period has elapsed. In these cases the occupier is stuck with the rates bill until either a significant physical alteration is made to the property or the next general revaluation takes place; therefore, it is all the more important to ensure that your client takes professional advice at the outset.

Adrian is a partner in Costello Commercial, a past Chairman of the SCS GP Division, and has 30 years’ experience as a valuation surveyor and rating consultant.

Chartered Building Surveyors Land Surveyors Project Managers

ASSESS - ASSURE - PROTECT 59 Merrion Square, Dublin 2.

Tel: 01-661 0390 email: info@mcgovernsurveyors.ie www.mcgovernsurveyors.ie

The need for a revaluation It is acknowledged that the basic argument behind a revaluation is that the rates

SCSREVIEW 19

SCSReview_Winter09_V(q7)Q6

01/12/2009

18:33

Page 20

Professional fees

Department clarifies 8% reduction The Minister for Finance, Brian Lenihan, has recently written to the Construction Industry Council (CIC) to clarify the position in relation to the 8% fee reduction for professional services rendered by construction consultants after March 1, 2009.

Following the introduction of the Financial Emergency Measures in the Public Interest Act 2009, and the intention of some Government agencies to apply an 8% reduction to all fees payable after March 1, 2009, the Society, in conjunction with the RIAI and the ACEI, met with the Department of Finance in early June 2009 to discuss the impact of the proposed fee reduction on a sector that continues to experience salary cuts and shortened working weeks, as well as an overwhelming increase in unemployment.

The representative bodies had put forward scenarios arising from two main areas of concern:

1. New fee bids – post March 1, 2009 In relation to new fee bids, the professional bodies informed the Department that there was widespread confusion among consultants as to whether or not the 8% fee reduction should be included in a tender. This was leading to an unlevel playing field for all concerned.

The Department of Finance in its recent communication to the CIC has confirmed that prices in contracts for construction-related services awarded after March 1, 2009, following a tender competition, should reflect the extremely competitive market conditions prevailing at present, and therefore it would not be appropriate to seek an 8% reduction in price on these contracts. Tenders submitted by consultants after March 1 should state that the consultant’s pricing proposals take account of the 8% reduction.

2. Pre-existing contracts – pre March 1, 2009 The representative bodies highlighted the fact that fee bids tendered over the past 18 months already reflect market conditions, which are extremely competitive, and in many cases have resulted in savings in excess of the 8% being sought by Government, and are demonstrative of the overall value for money now available in the construction sector.

In considering the 8% reduction on fees for construction-related services provided after March 1, 2009, under existing contracts, the Department of Finance has confirmed that the contracting authority should carry out a risk assessment to determine what impact a reduction of this nature might have on these contracts. The risk assessment should establish if: a) it is legal to terminate the contract (this might be done where there is a ‘no fault termination’ or ‘termination at will’ clause or other such provision in the contract, and attempts to achieve the required reduction have failed, and market conditions for such services remain competitive); b) savings of at least equal to the 8% reduction have been obtained as a result of the extremely competitive prevailing market conditions at the time tenders were sought; or, c) savings have been achieved in the case of percentage fees agreed at a time of high construction costs, which have since fallen back dramatically due to adverse market conditions resulting in significant fee reductions equal to at least 8%.

If a service contract is going to be terminated as at (a) above, the savings achieved through the procurement of new consultants should be documented and approved by the relevant accounting officer.

If it is decided not to proceed with the 8% reduction because of saving at (b) and (c) above, this should be documented clearly and approved by the relevant accounting officer.

A copy of the Department of Finance clarification to the CIC has been published in the news section of the Capital Works Management Framework on the Department of Finance’s construction procurement website – www.constructionprocurement.gov.ie.

The Society also issued a Practice Memorandum (PM 09/04/F56) on October 29, 2009, advising members of the above.

Ciara Murphy

Ciara is Director General of the SCS.

20 SCSREVIEW

SCSReview_Winter09_V(q7)Q6

01/12/2009

18:33

Page 21

Economy

Prospects for the Irish economy in 2010 This article is based on the ESRI’s recently published ‘Quarterly Economic Commentary’, co-authored by ALAN BARRETT, IDE KEARNEY and JEAN GOGGIN.

Following a truly dramatic contraction in the Irish economy in 2009, the ESRI now expects a further contraction in the early part of 2010. Although modest growth is expected to re-emerge in the latter part of 2010, for the year as a whole GNP is expected to fall by 1.7%.

One striking feature of the contraction that is expected for 2010 is its domestic nature. The ESRI expects exports from Ireland to grow in 2010. The pace of growth is expected to be modest, at just 1.1%. However, the drag from domestic factors will be sufficient to outweigh the positive impact of exports on overall growth.

In our forecasts, the ESRI assumes that the Government will seek savings of €4 billion in Budget 2010. This is the figure that was announced in the Supplementary Budget of April 2009. It has also been repeated in a range of statements from Government ministers, so it seems likely that the tax/cuts package to be announced on December 9 will amount to that figure.

The withdrawal of €4 billion from the economy in 2010 will amount to 3% of GNP in that year. Clearly, this will have a direct negative impact. In addition, as a result of the associated income losses – whether arising from public sector pay cuts or reductions in welfare payments – spending by consumers will also fall. The ESRI expects private consumption to fall by 2% in 2010.

Investment spending is also forecast to fall in 2010, by 15%. This will occur because of the ongoing contraction in house building, but also because of falls in commercial building and in the purchases of machinery and equipment.

of GDP. For 2010, even with the implementation of the €4 billion package, we again expect the deficit to be 13% of GDP. As a result of the ongoing gap between public revenue and expenditure, the general government debt is expected to rise to 75% of GDP in 2010, up from 25% in 2007. The figure of 75% does not include the liability that will be incurred as a result of NAMA. Were this to be added, it would bring the debt to over 100% of GDP. However, it looks increasingly likely that the NAMA-related debt will not appear as part of the general government debt, for the purposes of official statistics.

Labour market The impact of the recession has been felt most strongly in the labour market.

At the beginning of 2008, the rate of unemployment was just 4.8%. Since then it has increased dramatically to 12.6%. Although the pace of increase has eased somewhat during the course of 2009, we still foresee ongoing falls in employment and consequent rises in both unemployment and outward migration. We expect to see unemployment peaking at just under 15% in the latter part of 2010. We expect that net outward migration will reach 40,000 in the coming year. Another route for adjustment in the labour market is participation, or the tendency for people to stop looking for work in a recession. We expect participation to fall by over one percentage point in 2010, following a similar fall in 2009. As the population aged over 15 is about 3.5 million, each 1 percentage point fall in participation amounts to 35,000 fewer people in the labour force.

Debt figures While the Budget package of €4 billion will be severe, it is important to stress that such a package will only stabilise the deficit as a percentage of GDP. For 2009, we expect the general government deficit to be almost 13%

Prices The falling level of prices has been another notable feature of recent economic developments. The annual rate of CPI-based inflation (up to

SCSREVIEW 21

SCSReview_Winter09_V(q7)Q6

01/12/2009

18:33

Page 22

Economy

September) is -6.5%. For 2009, we expect CPI inflation to average -4.3%, with HICP inflation (which excludes mortgage payments) averaging -1.5%.

For 2010, we expect the CPI rate to average zero, with the HICP rate expected to average -0.7. Hence, prices other than mortgages should still be falling next year. However, with ECB interest rate increases possible in the middle or latter part of 2010, mortgage payments could rise.

Property case reports McCarthy and Anor v Larkin

Correcting the public finances

The High Court, [2009] IEHC 75

As the likely budget package of €4 billion in savings will undoubtedly contribute to a further contraction in the economy in 2010, it is reasonable to ask if such a package is wise. In this context, the trade unions have been arguing that Ireland’s fiscal adjustment should be spread over a longer period.

We are firmly of the view that any postponement of action to correct the imbalance in the public finances would be unwise and it is important to explain why.

The need for speedy action to correct the public finances can be justified along a number of dimensions but here we will focus on two: 1. the level of interest payments; and, 2. confidence. As noted above, a €4 billion package of measures in budget 2010 will only stabilise the deficit at around 13% of GDP and the national debt, excluding NAMA, will rise to 75% of GDP. By postponing the fiscal adjustment, the stock of debt will rise, thereby leading to a higher interest bill. In addition, the failure to act decisively on the public finances will lead to international lenders charging a higher interest rate on loans to the Irish Government. This will compound the difficulties in financing the interest bill.

Turning to the issue of confidence, one of the lessons that we learned from the 1980s is that large fiscal deficits tend to depress consumer spending and investment spending. People understand that deficits in the public finances will ultimately lead to spending cuts or tax increases. The uncertainty that arises on when taxes will be increased and by how much tends to lead to people being conservative in their spending, whether for consumption or investment purposes. We are of the view that decisive action on the public finances in 2010 will provide greater certainty in the medium term, thereby contributing to an earlier resumption of economic growth.

This was a High Court appeal by the tenant of a property at Sackville Street in Limerick. It concerned two leases, both of which were for terms of 40 years and both expired on June 30, 2004. The landlords sought possession of the property and the tenant served a notice of intention to claim relief, alleging a right to a new tenancy. The property comprised a four storey over basement Georgian style residence with a yard and garden at the rear in a street of similar houses. The Court was satisfied that “every part of the property was in an appalling state of disrepair”. It was accepted that the property was not subject to ground rent legislation, and there was no statutory right in the tenant’s interest to buy out the freehold. The landlord relied on good and sufficient reasons for refusing to renew the lease pursuant to the terms of the Landlord and Tenant (Amendment) Act 1980 and in particular section 17 (1)(a)(v). This section provides that “the tenancy terminated otherwise than by notice to quit and the landlord either refused for good and sufficient reason to renew it or would, if he had been asked to renew it, had good and sufficient reason for refusing”. The Court found that it was satisfied that the landlord had established good and sufficient reasons in that the tenant had failed to keep the premises in good repair and was unable to do so.

Factors for recovery Of course, the restoration of order in the public finances is just one element in a set of factors that will be needed to generate and sustain economic recovery. We also need a properly functioning banking system and an improvement in our competitiveness. With regard to banking, the NAMA project holds out some hope, but it is still uncertain as to whether credit lines will re-open to the extent that will be needed. And on competitiveness, price falls provide an opportunity for nominal wages to fall without the full brunt being felt in real terms. Were these wage falls to occur, Ireland could price itself back into world markets quickly, thereby leading to economic growth and employment growth.

Prof. Alan Barrett

Alan is a research professor with the ESRI and coauthor of the Quarterly Economic Commentary.

22 SCSREVIEW

McNicholas and Anor v Mayo County Council and Anor The High Court, [2009] IEHC 379 The plaintiffs were owners of a residential property in Swinford, Co. Mayo. The property was adjacent to the Charlestown by-pass and, for the purposes of constructing that road, part of the plaintiffs’ land was compulsorily acquired.

The by-pass bisected what was formerly an access road to the property. The plaintiffs claimed that the alternative means of access provided was unsuitable.

The Court heard that one of the major complaints made by the plaintiffs was that the replacement access road was so steep, and so close to the edge of the by-pass, that it could not be used safely by one of the plaintiffs, because he suffered from vertigo.

The Court found, as a matter of fact, that the replacement access road was no more steep than part of the original access at certain places along its route.

The Court also found that the condition of vertigo had nothing to do with the suitability of the access road.

The plaintiffs’ alternative claim was that they had been led to believe that if they withdrew an objection to planning permission that the access road would be built along a slightly different route, which would have been more suitable.

They claimed that, having withdrawn the appeal on the basis of this understanding, the defendants failed to build the road along the alternative route, but rather built the road along a route to which the plaintiffs had always objected and which they claimed was unsuitable.

The Court found that the replacement access road had been built in accordance with the planning permission for the scheme passed by An Bord Pleanala. It also found that it had been accepted by the defendants that it was sub-standard on the grounds that it was built on lands that were not sufficiently large for the purpose. The Court pointed out that, in so far as there was an insufficient amount of land to enable a better access road to be

SCSReview_Winter09_V(q7)Q6

01/12/2009

18:33

Page 23

Legal

built, the plaintiffs had not challenged the compulsory purchase order itself.

Therefore it found, as a matter of fact, that the access road, as built, was legal. The Court found ample evidence to show that the defendants sought to address the problem by purchasing additional lands and that if the plaintiffs had been more co-operative, the new access road could have been moved further from the by-pass by means of an additional land acquisition and the plaintiffs ceding part of their own lands.

The Court found that the ideal solution would have been for the plaintiffs to engage in a meaningful way with the defendants so that the new access road could have been brought through additional lands acquired and through the portion of land to be ceded by the plaintiffs. By the time the defendants finally committed themselves to this it was too late. The Court found that this had created an anomaly where the new access road was built in accordance with a permission, yet appeared to be sub-standard and had been built on lands which were insufficient for the purpose. To that extent the Court found that it could be described as “unsuitable” access. The Court found that a suitable access could have been constructed if the plaintiffs had behaved in a more reasonable fashion and that they bore responsibility for their own actions.

The Court was also satisfied that the defendants could also have built the road across the additional acquired land, which would have made it more suitable, and no satisfactory explanation was given as to why this had not been done.

Therefore the Court found that there was fault on both sides. The Court found that it would not be practical to re-route the access road and, in view of the conduct of the plaintiffs, the Court did not propose to make any order in that regard. The Court found that, in so far as the route on which the road was built diminished the amenity value of the plaintiffs’ property, this was something that could be adequately dealt with in arbitration arising on foot of the compulsory acquisition.

William Devereux and Declan Devereux v Frances Goff and Goff Developments Limited The High Court, [2008 No. 9149P] This case concerned a conditional contract for sale signed in July 2005. The property comprised approximately eight hectares of land in Rosslare, Co. Wexford. The Court noted that the contract was made at a time when the state of the property market was very different from the time of the judgment (August 2009). The material condition to which the contract was subject was the achievement of planning permission in respect of the property on or before September 30, 2005. The Court found that the buyers’ case derived largely from the provisions of Part V of the Planning and Development Acts 2000-2002. In simple terms, the effect of Part V of the Act is to oblige developers to transfer land, property or money to the relevant local authority for the purposes of social and affordable housing. The value of such transfer was to be 20% of the development. Subsequent to granting planning permission Wexford County Council informed the sellers that, in the absence of agreement with the seller, 20% of the site itself should be reserved for such housing. The buyers’ case was that compliance with the Part V stipulation would be met by the provision of lands by the seller other than the property that was the subject of the sale. The buyers pleaded that the intended compliance with the Part V requirement was never identified and therefore was never complied with by the sellers. For the purposes of the contract, it meant that the planning permission had not achieved terms “satisfactory to the Defendants” in accordance with the contract. The Court decided that the planning permission was useless without a concluded Part V Agreement. It observed that without a Part V Agreement there could be no planning

permission and the contract could not be completed. It found that the sellers knew that the purchasers were concerned as to how Part V was to be satisfied even if they were using this partly as a ploy, having regard to the rapidly deteriorating state of the market. The Court went on to find that in the absence of planning permission the purchaser could never express his “satisfaction” because the terms of that planning permission were incomplete.

The Court found that the issue was not who is responsible for planning permission compliance but rather whether all the conditions of the planning permission were satisfactory to the purchaser. There were three sides to this issue, the sellers, the purchasers and the County Council. When completion of the sale was sought there was no certainty on the matter of Part V compliance. The purchasers were not and could not have been satisfied with regard to this condition of the contract. The Court therefore dismissed the claim for specific performance.

Paul Joyce, Liam Larkin and Susan Joyce v Declan O’Shea The High Court, [2008 no. 7854P] This case was commenced by the sellers seeking specific performance of a contract for sale dated May 2007. The purchase price was approximately €10.7 million with a nominal deposit of €100 paid on signing. In the alternative to specific performance, the sellers sought damages. As an ancillary matter the sellers also claimed interest for late completion of another contract in relation to certain adjoining lands.

In any case the buyer did not defend the proceedings and notwithstanding adjournment of the matter the buyer failed to dispute matters. As a result, the Court ordered that the contract was to be specifically performed and the interest amount be paid.

Subsequently, the buyers failed to comply with the order for specific performance. The sellers sought damages in lieu of specific performance and that the order for specific performance be dissolved. At this stage, the buyer sought to have the previous judgment in default of appearance set aside to enable him to defend the proceedings. The Court refused the buyers’ application to set aside the previous orders and declared that the sellers were entitled to damages to be assessed in lieu of specific performance, and dissolved the previous order providing that the contract be specifically performed.

The Court found that the measure of the damages to which the sellers were entitled was the difference between the contract price and the value of the lands at the date of the application to the Court to dissolve the order of specific performance – in this case June 2009. The Court found, citing a previous High Court case (1. Vandaleur v Dargan [1981] ILRM 75), that it had discretion to choose the most appropriate valuation date for the purposes of awarding damages and was not bound to the common law rule, that the property be so valued at the date of the breach of the contract. It found, however, that credit be given for any deposit paid against the damages. The Court awarded damages computed as being the contract price less the current market value less the deposit paid by the purchaser. The Court also ordered payment of the interest as claimed.

John Minihane ASCS MRICS

John is a partner, specialising in real estate, with Mason Hayes+Curran.

SCSREVIEW 23

SCSReview_Winter09_V(q7)Q6

01/12/2009

18:33

Page 24