Application to be made for wind-up of Irish Asphalt

Move part of dispute between JEC and Irish Asphalt over material with excessive pyrite

An application for the winding up of Irish Asphalt, part of the Lagan Group, for a failure to pay a €6 million court award will be made in the Commercial Court on Monday. It is expected the move will be resisted even though the company will admit it has not paid the debt and is not in a position to.

The application is the latest development in an ongoing dispute between James Elliott Construction (JEC) and Irish Asphalt arising from the supply by Irish Asphalt of material containing excessive amounts of pyrite for construction work done by JEC as part of the Ballymun regeneration project.

In a case that went to the Supreme Court and to Europe, JEC won damages of €3 million and costs of the same amount. The lengthy case finally ended last year. Meanwhile, JEC opened proceedings in 2014 in which it claimed deceit against Irish Asphalt directors Kevin and Terry Lagan and John Gallagher. If the deceit allegation were to succeed, it would pierce the limited liability protections that would normally apply to the company directors. The claim is being contested and has yet to come to court. Such deceit cases are rare in Irish corporate law.

The original case that led to the award involved the construction of a Ballymun youth facility by JEC. That case ran for 60 days in 2010 and 2011 and followed an even bigger case involving Menolly Homes and the Lagan Group that ran for 160 days. It involved a large number of experts and ran up costs of more than €70 million before being settled. That case arose from damage to approximately 1,000 houses built by Menolly in north Co Dublin. JEC has also taken a case against Irish Asphalt and the Lagan Group arising from materials supplied to JEC for work done in Sillogue, also as part of the Ballymun regeneration project.

Earlier this year, The Irish Times reported that Dublin City Council gave an interest-free loan of €6.6 million to JEC via the council-owned company Ballymun Regeneration Ltd in 2011. The loan was given in part so JEC could pursue proceedings through the courts, according to documents on which the report was based. The council would not comment because of the litigation that is before the courts, despite calls from some politicians that it explain the unusual transaction.

The loan allowed JEC to carry out €10 million worth of building repair work for Ballymun Regeneration, work which was not put out to tender. A contract covering the loan stated that JEC “does not, at the date of this agreement, have the financial means to carry out the remedial works nor to undertake the litigation”.

A December 2011 agreement between Ballymun Regeneration and JEC, called the “recovery proceedings funding agreement”, said the council subsidiary would be the ultimate decision-maker in relation to any steps taken by either party to recover money from litigation. It could not be ascertained at the weekend if the council has any role or knowledge of the proceedings to be opened in the Commercial Court on Monday.