Council fights insurer for payout over building costs

WESTMEATH COUNTY Council has claimed before the High Court that Quinn Direct Insurance company is required to pay out €500,000 under a bond guarantee related to a construction firm which was unable to complete a multi-million euro construction project.

The council wants a court order compelling the insurers to pay €500,000 for damages incurred by the council after the builders went out of business and were unable to complete a development including social housing, a handball alley and a building for the local Vocational Education Committee at Delvin in Co Westmeath.

The work was completed by another firm but the council claims losses of €600,000 due to the original builder's failure.

Quinn Direct denies the council's claims in proceedings which opened yesterday before Mr Justice Roderick Murphy.

Michael Howard SC, for the council, said it had employed Murenna Construction Ltd following a tendering process at an agreed price of €2.2 million.

Quinn Direct guaranteed Murenna's obligations under the contract, counsel said. The guarantee bond was limited to €541,000 and was to be paid out if the contract was deemed to have been breached.

It was agreed Quinn Direct could nominate a contractor to do the work that Murenna failed to do, provided the nominee was acceptable to the council.

On June 26th 2006, when some 30 per cent of the work was completed, the council was informed Murenna had ceased trading. The council had already paid the firm €639,746.

Quinn Direct then nominated another contractor to complete the work. However, the council re-tendered the project. In December 2006, it awarded the contract to another firm for €2.1 million.

The council sought to have the bond paid out but Quinn Direct had given "a myriad of reasons" why it was not required to pay out, Mr Howard said. Although the project was completed, the council incurred losses of more than €600,000 due to factors including remedial work and maintenance.

Quinn Direct argues the councils losses were increased over its refusal to accept the contractor it nominated.