ESB has been hit by 387 lawsuits stemming from flooding in Cork in 2009, after the High Court found 21 months ago that it was largely responsible for millions of euro of damage to University College Cork buildings.
The State-owned power company has revealed the extent of the legal actions in bondholder documents, recently approved by the Central Bank of Ireland.
The High Court ruled in October 2015 that ESB was 60 per cent liable for extensive damage to several buildings in UCC. This was after the university, which brought a claim on behalf of its insurer Aviva, argued the way the utilities company released water from two hydroelectric dams following heavy rainfall in November 2009 led to unnecessary additional flooding in the city and caused substantial damage.
Mr Justice Max Barrett found UCC 40 per cent liable for the damage as a result of contributory negligence on its part, including a failure to address information of flood risk on its properties and the building of low-level buildings in the flood plain of the river Lee.
Bondholder document
While UCC had sought €19 million in damages from ESB, a decision on costs was postponed pending the outcome of ESB’s appeal.
ESB said in the bondholder document, relating to its €5 billion medium term bond programme, that it believes, on the basis of legal advice, that “it is more probable than not that its appeal will be successful”.
As such, the company has not set aside provisions in its financial accounts to cover any liability. It expects the Court of Appeal hearing to take place this October.
“In addition to the Aviva/ UCC claim, ESB has, since the judgment in the UCC case, been served with 387 sets of additional proceedings relating to the 2009 flooding events,” the company said in the prospectus.
“Details of amounts claimed in relation to these proceedings have not yet been received and therefore, in the event that the Court of Appeal finds against ESB, it is not possible at the date of this [document] to make a reliable estimate of ESB’s likely financial exposure.”
Damages
It expects that any damages relating to the actions, including the UCC case, would be covered by its own insurance policies.
The number of additional legal actions is up from 354 cases at the end of last year, which had been disclosed in the company’s most recent annual accounts. ESB said in its 2015 annual report it had been served with 156 sets of proceeds.
A spokesman for ESB, where Pat O’Doherty is chief executive, declined to comment on the cases beyond the statement in the bond prospectus.
He said that the company had no immediate plans to issue bonds on the back of the update to the prospectus. ESB last sold debt through a programme in January, when it raised €500 million at a fixed 1.75 per cent annual rate.
“ESB issues bonds as part of its funding strategy to support investment in network and other infrastructure for the benefit of its customers and the Irish economy,” the spokesman said. “ESB has no imminent plan to issue another bond.”
