Committee Reports::Report - Faults in Buildings Occupied by the Public Service::03 December, 1985::Report

As a result of a parliamentary question put down to the Minister for Finance in April, 1985 by Deputy John Kelly and the Minister’s subsequent answer, the Committee decided to investigate serious faults, which had developed in two buildings in Dublin occupied by the Public Service. (Appendix A).

(2)Kildare House (part of the Setanta complex), Lower Kildare Street, occupied by the Department of the Public Service.

Mr. Berkery, Principal Officer, Office of Public Works and Mr. Hayden, Assistant Principal Architect, Office of Public Works appeared before the Committee on May 7th and 14th. They explained the background to the defects which had arisen on both buildings as well as answering questions from members of the Committee.

The Committee members wish to place on record their appreciation of the open, frank and co-operative attitude adopted by Mr. Berkery and Mr. Hayden throughout the proceedings.

Davitt House:-

This building was erected by a private developer in the mid sixties. The State took a tenancy of the building with a full repairing lease. Early in 1985 scaffolding was erected along the front elevation of the building in order to permit close investigation by a firm of structural engineers engaged by the Office of Public Works, of the reasons for deterioration in some pre-cast concrete facing units. The engineers reported that while the structural integrity of the building was not at risk slow but progressive deterioration had been occurring in certain non-structual pre-cast concrete units. The building had originally been erected in accordance with approved codes of practice current in the mid-sixties, some of which however have been subsequently modified and upgraded in the light of later experience.

It is difficult to see how any prospective tenant or purchaser of Davitt House could have anticipated twenty years ago that the defects which only became evident very recently would have arisen.

Delicate negotiations between landlord and tenant were understood to be in progress during the Committee’s deliberations. It was felt that it could prejudice the negotiations if a public discussion about them took place between the Committee and the Office of Public Works officials present. Consequently this issue could not be probed in depth and to that extent the Committee was unable to reach conclusions at the time about remedial costs and who was to bear them.

The Committee enquired from O.P.W. in November 1985 about the cost of the remedial works and was informed that while these were not yet fully completed they were expected to cost approximately £200,000. Because the terms of the lease included full repairing covenants by the lessee the cost has to be borne by the tenant i.e. the State. While commercial leases of office space normally provide for full repairing covenants by lessees consideration should perhaps be given to inserting some qualifications or limitations on these onerous repairing covenants in the future. It is appreciated that this is a complex issue with implications for lessors, lessees, developers, the Construction Industry and Pension funds. However, the Committee recommends, in relation to leases on buildings to be occupied by the State, that the Minister for Finance initiate a review (if this has not already been done) of commercial lease terms particularly the scope and extent of repairing covenants.

Kildare House:-

This building was built by private developers in 1975. Initially the State took a tenancy by way of a normal 35 year repairing lease with 5 year rent reviews from July 1st 1975 at a commencing annual rent of £161,848. Because of the particular location of the building, opposite the gates of Leinster House and the probable longterm use of the building by the State and the Houses of the Oireachtas a Government decision was ultimately taken to purchase the building early in 1978.

The purchase was somewhat complicated by the fact that negotiations with a British Pension fund for the acquisition of the entire Setanta complex, of which Kildare House was a part, had been in progress for some time previously. These negotiations were successfully concluded but the new owners agreed to the purchase by the State of Kildare House for the figure agreed with the original developers i.e. £2.65M. Some additional costs did however arise. These additional costs, borne by the State, inclusive of 6% Stamp duty amounted to £220,542.44.

Approximately a year after purchasing the building the Office of Public Works noticed some signs of deterioration in the brick cladding at the front. Similar defects were noted in other buildings within the Setanta complex. These were drawn to the attention of the landlord. The brick cladding became gradually worse in the sense that evidence of movement and cracking increased.

The landlord of the main Setanta complex had the problem thoroughly investigated and it was concluded that differential movement between the reinforced concrete structural inner leaf and the brick outer cladding was occurring. No expansion joints had been used in the brick cladding and it was therefore unable to tolerate the movement without cracking. This in time led to a situation which the Minister for Finance described in the following terms - “The brickwork on the entire complex was in danger of falling away from the main structure of the building.” A series of expansion joints were proposed as well as the repointing and/or replacing of cracked or loose brickwork.

The Office of Public Works examined the remedial measures proposed for the affected buildings in the Setanta complex and decided to adopt the same measures in Kildare House. It was also decided to engage the same contractor on the basis of a negotiated competitive price. The anticipated total cost of the remedial works to Kildare House was approximately £110,000. The work was commenced and completed in the Spring/Summer of 1985. The final cost was £116,000 which was borne in full by the owner of the building i.e. the State.

In the opinion of the Committee the events just outlined raise some serious questions. These are summarised hereunder:-

1.Why was Kildare House leased and subsequently purchased without a detailed building survey carried out?

2.Had such a detailed survey been carried out is it likely that the problems which subsequently occurred would have been foreseen?

3.Who was to blame for the defects and who should have borne the remedial costs?

1. Absence of a detailed building survey?

The Committee believes there should have been such a survey. Furthermore, no building which the State proposes to purchase or lease (with repairing covenants) should be acquired without undertaking a detailed survey, ideally of the drawings and specifications and of the building itself at various stages of construction and on completion. While the skills and resources to undertake such surveys unquestionably exist within the Office of Public Works some consideration should be given to engaging outside consultants of substance with full professional indemnity cover. The reason for this suggestion is simply that if the Office of Public Works undertakes the survey and fails to discover defects which should reasonably have been discovered, the State has little or no redress against itself. Were an outside consultant, with adequate professional indemnity cover, to prepare the survey the State would have redress.

2. Would a detailed survey have anticipated the problems at Kildare House?

This is a very difficult question to answer. On the one hand it is easy to be wise after the event. On the other, differential movement between materials has been known about for decades. To erect a thin brick outer cladding tied to a reinforced concrete structural wall without expansion joints, even where the brick was broken up at close intervals by windows etc., would probably have caused an experienced structural engineer or architect to raise some questions about the original design. However, the Committee cannot say with any certainty that a detailed survey would have highlighted the problems which subsequently occurred.

This however does not weaken in any way the Committee’s recommendation that such a detailed survey should in all cases be undertaken.

3. Who was to blame and who should have borne the cost?

In the Committee’s opinion the designers made a design error or at least a professional misjudgement. However, the Office of Public Works’ representatives informed the Committee that they had been advised by the Chief State Solicitor that they could not proceed against the designers because the State had purchased not from the developers by whom the designers were engaged, but from the pension fund which had bought the building before selling it to the State and secondly because the State had purchased the building “as is.”

(A)Reputable and experienced professional consultants were engaged to design the building. They were paid for their services and should be accountable for the outcome. They very probably had a professional indemnity policy to protect them against the consequences of design errors or professional misjudgement. It is surely unacceptable that the cost of rectifying a design error which manifested itself within four years of completion of this building should fall upon the purchaser i.e. the State.

(B)In purchasing the building or indeed in leasing it (with repairing covenants), the Office of Public Works and/or their legal advisers should have insisted that whatever warranties existed between the original developers and their designers in respect of faulty design or errors in professiona judgement should have been passed on to the State. There seems little doubt that had the original developers been the owners at the time the faults appeared they could have successfully sought redress from their designers. The Committee believes that recourse to such redress should not have been cut off as a result of the ownership of the building changing hands. It would not have been very difficult to obtain agreement from the lessor or vendor on this issue as it would have cost them nothing. It would simply pass on whatever rights the original developer had with the designers to the lessee or new purchaser. That transfer of rights and/or warranties would have enabled the State to seek redress from those whom the Committee regards as responsible for the occurrence of the serious faults in the brick cladding - namely the designers.

4. Recommendations

2.A 10-year (minimum) structural guarantee should be obtained. Developers can now obtain insurance cover to provide such a guarantee.

3.The new lessee or purchaser should insist that rights and warranties which the owner/developer has with his design team and contractors are passed on. He should also ensure that the building design team has adequate professional indemnity insurance cover.

4.Commercial lease terms in general use should be reviewed, particularly in relation to repairing covenants. (Ref. Page 3).

POST SCRIPT

The Committee recognises that occurrences and consequences similar to those at Davitt House and Kildare House are not confined to buildings owned or leased by the State. Similar and worse examples have arisen in Ireland on buildings constructed and occupied by the private sector. It is hoped that the experiences outlined herein as well as the recommendations will help to avoid such occurrences in the future or where they do occur place the responsibility where it belongs.