Monday 19 September 2011

Council told to return €1.1m to builder

THE HIGH Court has ruled that a building company is entitled to the return of more than €1 million paid by it to Galway County Council towards construction of a bypass that was never completed.

Mr Justice Gerard Hogan said yesterday that O’Malley Construction Ltd was entitled to a refund of €1.1 million, with interest, of money paid as part of a condition of planning permission secured by it several years ago to develop a site at Barna, west of Galway city.

The judge held that as the bypass had not been completed, the council was “not entitled to require the developer to make a contribution to works that ultimately did not benefit the company’s development”.

If that were the law, Mr Justice Hogan added, then “it would be tantamount to saying the council enjoyed a taxation power”.

The company paid €1.1 million as a contribution towards construction of a 2.7km bypass of the village of Barna, but just 460 metres of the bypass have been constructed.

The council argued that the proposed carriageway was 1.7km, with the extra kilometre made up of roundabouts and slip roads.

The company, with registered offices at Augustine Street, Galway, brought proceedings over the council’s refusal to refund the bypass contribution money.

The company claimed it was required to pay the money to the council as a condition of securing planning permission for 148 dwellings and five commercial units at “An Creggan” in Barna.

Planning permission was granted by An Bord Pleanála in January 2003 and O’Malley Construction paid €1.1 million towards the cost of the proposed bypass, which was located to the north of Barna and was due to link up with the road around Galway city.

The total cost of the proposed bypass was €8.95 million.

In the eight years since planning permission was granted, the company claimed just 17 per cent, or 460 metres, of the road to the north of Barna had been built.

As a result, the company sought the bulk of its payment back. The council opposed the proceedings. It refused the refund request because a section of the bypass had already been built.

It also argued that the company was made aware that the completion of the bypass was contingent on other development in the vicinity being completed.

The company argued it was entitled to a refund because, under the terms of the planning condition, the payment was made on the basis the entire bypass would be completed.

In addition to the €1.1 million contribution, O’Malley Construction paid the council an additional €100,000 as a goodwill gesture and also wanted that back.

In his judgment, Mr Justice Hogan said the council had had seven years to build the bypass. As this had not occurred, the council’s requirement for a planning contribution was ultra vires and the local authority was obliged to return the money.

The judge said the company was not entitled to have the €100,000 goodwill gesture returned.

Unlike the planning contribution, that payment was voluntary and earmarked for a specific purpose – to buy the lands where the 460 metres of carriageway had been built, he concluded.

Irish Times

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