James Elliott Construction Ltd v Irish Asphalt Ltd

• Jurisdiction: Ireland
• Judge: Mr. Justice Charleton
• Judgment Date: 25 May 2011
• Neutral Citation: [2011] IEHC 269
• Court: High Court
• Date: 25 May 2011

James Elliott Construction Ltd v Irish Asphalt Ltd

COMMERCIAL

BETWEEN

JAMES ELLIOTT CONSTRUCTION LIMITED

PLAINTIFF

AND

IRISH ASPHALT LIMITED

DEFENDANT

[2011] IEHC 269

[No. 4767 P/2008]

THE HIGH COURT

CONTRACT LAW

Breach

Sale of quarried materials - Whether supplied infill ruined by abundance of pyrite - Allegations of poor design and construction - Cause of damage - Whether pyrite under floors caused upward heave - Burden of proof - Onus on proof on plaintiff - Expert evidence - Inability of experts to agree - Evaluation of expert evidence - Sale of goods - Whether Irish legislation as to sale of goods applicable - Implied condition as to merchantability and fitness for purpose - Whether goods of merchantable quality - Whether goods fit for purpose - Whether clause limiting liability to cost of infill notified to purchaser - Burden of proof on party relying on exclusion clause - Methods of incorporating condition - Necessity for reasonable notice of exclusion or limitation clause to be given - Whether limitation clause enforceable as matter of law - Whether limitation clause fair and reasonable - Davey v Magistrates of Edinburgh [1953] SC 34; Best v Wellcome Foundation Ltd [1993] 3 IR 421; Loveday v Renton [1989] 1 Med LR 117; Millar v Minister for Pensions [1947] 2 All ER 372; People (DPP) v Kiely (Unrep, CCA, 21/3/2001); Rhesa Shipping SA v Edmunds [1985] 1 WLR 948; Hanrahan v Merck Sharp and Dohme (Ireland) Ltd [1988] ILRM 629; Quinn v (a minor) v Mid Western Health Board [2005] IESC 19; [2005] 4 IR 1; Nathan v Bailey Gibson Ltd [1998] 2 IR 162; Marleasing SA v La Comercial Internacional de Alimentacion SA (C-106/89) [1990] ECR 3135; Aswan Engineering Co v Lupdine Ltd [1987] 1 All ER 135; Christopher Hill Ltd v Ashington Piggeries [1972] 1 AC 441; Rogers v Parish Ltd [1987] QB 933; Cavalier Marketing (Australia) Pty Ltd v Rasell [1990] 96 ALR 375; Richardson, Spence & Company v Rowntree [1894] AC 217; Thornton v Shoe Lane Parking Ltd [1971] 2 QB 163; Olley v Marlborough Court Ltd [1949] 1 KB 532; Shea v Great Southern Railways Co [1944] 1 IR Jur Rep 26; Shearan v Great Southern and Western Railway Co (1898) 12 ILTR 108; Interfoto Library v Stiletto [1989] QB 433; AEG (UK) Ltd v Logic Resources Ltd [1996] CLC 265 and Carroll v An Post National Lottery Company [1996] 1 IR 433 considered - Sale of Goods and Supply of Services Act 1980 (No 16), ss 10, 14 and 22 - Judgment granted with damages to be assessed (20084767P - Charleton J - 25/5/2011) [2011] IEHC 269

James Elliott Construction Ltd v Irish Asphalt Ltd

DAVIE v EDINBURGH CORP 1953 SC 34 1953 SLT 54

BEST v WELLCOME FOUNDATION LTD & ORS 1993 3 IR 421

LOVEDAY v RENTON & WELLCOME FOUNDATION LTD (NO 1) 1989-90 1 MED LR 117

MILLER v MINISTER OF PENSIONS 1947 2 AER 372

DPP v KIELY UNREP CCA 21.3.2001 2001/8/1883

RHESA SHIPPING CO SA v EDMUNDS 1985 1 WLR 948 1985 2 AER 712

HANRAHAN v MERCK SHARPE & DOHME (IRL) LTD 1988 ILRM 629 1988/5/1234

CIVIL LIABILITY ACT 1961 S11(3)

QUINN (A MINOR) v MID WESTERN HEALTH BOARD & O'SULLIVAN 2005 4 IR 1 2005 2 ILRM 180 2005/51/10715 2005 IESC 19

SANDES CRIMINAL LAW & PROCEDURE IN THE REPUBLIC OF IRELAND 3ED 1951 177

EEC DIR 89/106

NATHAN v BAILEY GIBSON LTD 1998 2 IR 162 1996/7/2004

EEC DIR 98/34 ART 1

EEC DIR 98/48

EEC DIR 98/34 ART 7

MARLEASING SA v LA COMERCIAL INTERNACIONAL DE ALIMENTACION SA 1990 ECR I-4135 1993 BCC 421 1992 1 CMLR 305

PFEIFFER & ORS v DEUTSCHES ROTES KREUZ & KREISVERBAND WALDSHUT EV 2004 ECR I-8835 2005 1 CMLR 44 2005 ICR 1307

SALE OF GOODS & SUPPLY OF SERVICES ACT 1980 S10

M/S ASWAN ENGINEERING ESTABLISHMENT CO v LUPDINE LTD 1987 1 WLR 1 1987 1 AER 135

ASHINGTON PIGGERIES LTD & ANOR v CHRISTOPHER HILL LTD 1972 AC 441 1971 2 WLR 1051 1971 1 AER 847

SALE OF GOODS ACT 1893 S14(2)

ROGERS v PARISH (SCARBOROUGH) LTD & ANOR 1987 QB 933 1987 2 WLR 353 1987 2 AER 232

CAVALIER MARKETING (AUSTRALIA) PTY LTD v RASELL & ANOR 96 ALR 375

MCDERMOTT CONTRACT LAW 2001 CHAP 8

RICHARDSON SPENCE & CO & LORD GOUGH STEAMSHIP CO LTD v ROWNTREE 1894 AC 217

THORNTON v SHOE LANE PARKING LTD 1971 2 QB 163 1971 2 WLR 585 1971 1 AER 686

OLLEY v MARLBOROUGH COURT LTD 1949 1 KB 532 1949 1 AER 127

SHEA v GREAT SOUTHERN RAILWAYS CO 1944 IJ 26

RYAN v GREAT SOUTHERN & WESTERN RAILWAY CO 1898 32 ILTR 108

INTERFOTO PICTURE LIBRARY LTD v STILETTO VISUAL PROGRAMMES LTD 1989 QB 433 1988 2 WLR 615 1988 1 AER 348

AEG (UK) LTD v LOGIC RESOURCE LTD 1996 CLC 265

CARROLL v AN POST NATIONAL LOTTERY CO 1996 1 IR 443 1996/2/352

SALE OF GOODS & SUPPLY OF SERVICES ACT 1980 S22

SALE OF GOODS & SUPPLY OF SERVICES ACT 1980 SCHED

SALE OF GOODS & SUPPLY OF SERVICES ACT 1980 SCHED PARA 2(C)

SALE OF GOODS & SUPPLY OF SERVICES ACT 1980 SCHED PARA 2(D)

1 Judgment of Mr. Justice Charleton delivered the 25th day of May 2011.

2 1. The plaintiff and the defendant companies have both been involved in construction for generations; as builders and as suppliers to builders respectively. The plaintiff James Elliott Construction Ltd. ("Elliott Construction") has built everything from the simplest of houses to complex specialist projects. The defendant Irish Asphalt Ltd. ("Irish Asphalt") sells quarried materials. This judgment considers whether one of Elliott Construction's buildings was ruined by an abundance of pyrite in underfloor crushed stone infills purchased from Irish Asphalt. It is claimed that this infill, in breach of the contract of sale, expanded and heaved upwards.

3 2. From 2004 to 2005, James Elliott Construction built the Ballymun Central Youth Facility ("the building"). This is part of the redevelopment of Ballymun town undertaken through Ballymun Regeneration Ltd. ("Ballymun Regeneration"). The building was finished in September 2005. It could have been expected to last for up to 100 years in the form in which it was handed over. Ten years ago, where the building now is, there also was a youth centre. The construction of the new youth centre involved demolishing some of the old one, but retaining a large piece of it. This now forms most of the western area of the building. The construction was then continued over two storeys along a northern and eastern face, and over one storey along the southern face that adjoins the Church of the Holy Spirit. It is a large rectangular structure built around a central courtyard that is open to the sky.

4 3. Any building may have a suspended floor at ground level or a floating floor. The building has a series of poured concrete floors that rest, or float as the trade says, on the Irish Asphalt infill. Around part of the exterior of the building are pavements that are finished to a high standard. The central courtyard is paved in brick. All of these surfaces rest on the hardcore infill supplied by Irish Asphalt. The hardcore infill specified for this role is called Clause 804. It is normally used for the support of roads because it is hardwearing, of high quality and very durable. Builders use it for floor support, when required to do so by the employer, because of its high levels of stability, toughness and reliability. Clause 804 is crushed rock, in this instance, ranging in size from stones that would fit in the palm of a man's hand (to fit through a 63 mm x 63 mm sieve, though they can exceed that measure in length) to tiny fragments. The building is now, in 2011, a testament to the high standards and social-minded intention of Ballymun Regeneration. Unfortunately, the building previously exhibited serious defects. After practical completion in 2005, cracks began to appear in the ground floor walls. These started out as hairline cracks. Over time more cracks appeared and the condition of the interior walls made the building unusable. Elliott Construction remediated the building in 2009 at a cost of some €1.55 million. Multiples of that sum have been spent on engineering and petrographic investigation and on legal fees. This trial lasted 58 days: 6 days for submissions and the rest for testimony; expert evidence being the vast majority of it. Another case on pyrite heave ran before the Commercial Court for 159 days and then settled. Counsel proofed this case very carefully. They cannot be faulted, but must rather be praised. Calling several experts on the one topic, however, may be an issue that will require the trial judge to be involved in directing appropriate proofs, a step beyond case management, if delay and expense are not to be allowed to potentially defeat the right of access to the court guaranteed in Bunreacht na hÉireann.

5 4. The cause of this damage is at the centre of the dispute between Elliott Construction and Irish Asphalt. Elliott Construction claims that the bulging and cracking was due to the abundant presence of a mineral called pyrite within the Clause 804 hardcore sold to it by Irish Asphalt. This mineral, it is claimed, reacted with water, producing sulphuric acid and this, in turn, reacted with calcite formations within the crushed stone, causing crystals of gypsum to form, thus opening laminations within the stone, causing fissures, opening existing fissures further and adhering around the stones. This is argued to have caused the floors and brick-paved courtyard to be heaved upwards; making the opening of some doors impossible, buckling and cracking the walls severely and rendering the ground floor of the building effectively useless. Irish Asphalt has claimed that this allegation of pyrite heave is only an unproven theory. It pleads that if it is not established as a probability, the Court should dismiss the action. As a countervailing theory, Irish Asphalt has called evidence to seek to prove that the building was badly designed by Moylan Consulting Engineers ("Moylan"), the contract engineers. In particular, it claims that the Clause 804 infill was used at excessive depth around the...