Council agrees a settlement with Eyre Square contractor

Date Published: 10-Oct-2011

BY ENDA CUNNINGHAM

Galway City Council has reached a settlement with the original contractor who abandoned the controversial Eyre Square enhancement scheme in 2005.

Interim City Manager Joe O’Neill said it was decided to settle, because Samuel Kingston Construction Ltd (SKCL) is not trading and would probably not be able to meet any potential legal costs and awards from future actions.

Under the terms of the settlement, SKCL has withdrawn its claim for around €6m in compensation from the City Council, and will instead pay €150,000 to the Council.

As revealed in our sister newspaper the Galway City Tribune a fortnight ago, discussions have been ongoing between both sides in recent months in an effort to avoid a costly repeat of the arbitration process, which ended up being overturned by the Supreme Court.

The Galway City Tribune subsequently revealed last week that the final cost for the project is now €15m – it was originally IRL£1m when first mooted in 1996, but contracts were signed in 2004 at €6.3m.

In March 2010, the Council secured a Supreme Court ruling setting aside a decision made by an arbitrator in October 2008 which found in favour of Cork-based SKCL, and a subsequent High Court appeal which also found in favour of SKCL.

The Council subsequently asked SKCL to consider settlement, which was refused. However last June, the company’s legal team said it was willing to reconsider.

“Through our representatives, I indicated the Council’s willingness to pursue this option and a mediator was appointed. Following preliminary meetings, mediation took place over two days in early September.

“While the mediation process itself did not yield an agreed outcome, progress was made towards a settlement, and following further negotiations after the mediation, and extensive consultation with the Council’s legal team, a settlement was agreed between the parties,” said Mr O’Neill.

Under the terms of the agreement, both parties have withdrawn their claims and counterclaims; the Council will release a €950,000 insurance bond; SKCL will pay the Council €150,000, and there is no admission of liability from either side.

“The dispute with SKCL has now been ongoing since 2006. During that time GCC have had to fund and devote time to two mediations, a lengthy set of arbitration proceedings, a High Court challenge, a Supreme Court challenge and, most recently, a new arbitration process,” said Mr O’Neill, adding that it would take time and cost a considerable amount of money.

“While it is likely, particularly given the decision of the Supreme Court, that GCC would succeed in arbitration, there is no certainty about this.

Read more in today’s Connacht Sentinel