James Elliott Construction Ltd v Irish Asphalt Ltd

• Jurisdiction: Ireland
• Judgment Date: 02 December 2014
• Neutral Citation: [2014] IESC 74
• Date: 02 December 2014
• Docket Number: RECORD NO. 384/2011
• Court: Supreme Court

BETWEEN/

JAMES ELLIOTT CONSTRUCTION LIMITED

Plaintiff/Respondent

-and-

IRISH ASPHALT LIMITED

Defendant/Appellant

[2014] IESC 74

O”Donnell J., MacMenamin J., Dunne J.

RECORD NO. 384/2011

THE SUPREME COURT

Construction – Defects – Liability –Respondent company claiming appellant”s infill was cause of defects – Costs of repair

Facts: The respondent company had been contracted to build a youth facility in Ballymum. After completion of the works, using infill supplied by the appellant company, defects appeared. Remediation works were carried out by the respondent. The respondent contended the source of the defects was the appellant”s infill and sought damages for the cost of the remediation works. The High Court found for the respondent, and that decision was now appealed.

Held by the Supreme Court, that upon hearing submissions by the parties, a reference to the CJEU was necessary in respect of the Technical Standards Directive and the decisions of the CJEU. Whilst the submissions of the appellant were not conclusive, the Court could not say that those submissions would not impact on the final decision in the matter. The matter would therefore be referred to the CJEU.

Ruling of the Court delivered on the 2nd day of December, 2014

1 Introduction

2 1. The Ballymun Central Youth Facility project was part of an imaginative urban regeneration scheme (by Ballymun Regeneration Limited) in an area where bad housing, social deprivation, and youth unemployment were historically prevalent. After practical completion of the facility in 2005, cracks began to appear in the ground floor and walls. These started as hairline fractures, but expanded and this put the building at risk. As the High Court Judge put it in a detailed judgment, the facility was ‘ruined’. The construction company which had built the building, James Elliott Construction Limited (‘Elliott Construction’), the respondent herein, accepted that it was liable for the work done and the materials used and carried out remediation in 2009 at a direct cost of €1.55 million to it. Many more millions have been spent since on investigations of the building and on the costs in the High Court and on appeal. The building is now, and as a result of the expensive remediation carried out by Elliott Construction, free of defect.

3 2. Elliott Construction subsequently initiated proceedings against the defendant/appellant, Irish Asphalt Limited (‘Irish Asphalt’), claiming that the infill (Clause 804 infill) provided by it, and placed underneath the floor in the building had caused ‘pyrite heave’ which was the cause of the damage to the building. It was submitted that the Clause 804 infill provided to it contained framboidal pyrite, which is now known to expand with moisture. If used as infill below solid flooring, the effect of even relatively small amounts of movement can be dramatic and drastic. Irish Asphalt supplied this infill from its own quarry for what, in the context of this case, was the small sum of €25,000 plus VAT. Irish Asphalt, in turn, argued in the High Court that the allegation of pyrite heave was an unproven theory and several alternative arguments were submitted to the Court. On the 25th May 2011 the High Court found that the damage to the building had been caused by pyrite heave and thus found against Irish Asphalt. Irish Asphalt has appealed that decision.

4 3. In this appeal, Irish Asphalt no longer contests that pyrite heave caused the damage to the building as found by the High Court. Accordingly, much of what was in contention in the High Court is no longer directly relevant in this appeal and it is not necessary to consider the very complex issues of science and fact which are set out in the comprehensive High Court Judgment in any extensive detail. However, it is necessary to outline these matters briefly to facilitate a full understanding of this appeal. The matter to be decided in this appeal is essentially, which company is responsible in law for the costs of the remediation carried out by Elliott Construction. Is it to be Elliott Construction, which purchased the Clause 804 infill, or is to be Irish Asphalt, which provided the product?

5 4. This judgment will consider:

a. The findings in the High Court;

b. The issue of implied terms under the Sale of Goods and Supply of Services Act 1980 (‘the 1980 Act’);

c. Whether the contract in question contains a limitation of liability clause; and

d. Issues which arise under European Union law.

6 In order to understand the findings of the High Court it is first necessary to give a brief description of Clause 804 and of pyrite heave.

7 Clause 804

8 5. Clause 804 is a type of crushed rock which is commonly referred to as an ‘aggregate’. This aggregate is made up of stones which range in size from stones that would ‘fit in the palm of a man”s hand’ as described in the High Court Judgment (para. 3), to tiny fragments. Clause 804 is called ‘hardcore infill’ and it was originally specified for the support of roads (and takes its name from the standard specifications for road building) because it is hardwearing, of high quality and durable. These qualities meant that it was also used as high quality infill in building projects. It was used in this instance as sub-floor infill and under exterior paving around the building and in its central, open courtyard. The trial judge found that it was recognised as a high quality product, also frequently used as floor support in buildings when required because of its high levels of stability, inertness, and durability.

9 Pyrite Heave

10 6. Pyrite heave is a problem identified in the last thirty years. It causes building foundations to expand and rise. Pyrite heave has been a problem in several other countries such as Canada. A useful description of the process of pyrite heave was given by a Canadian body, Le Comité technique québécois d”étude des problèmes de gonflement associés à la pyrite and quoted at para. 7 of the High Court Judgment:

‘Pyrite (FeS ²) is the main iron sulphide responsible for swelling and is also one of the most abundant minerals on the planet. Pyrite is found in several different types of rock, in fairly low percentages (? 1%).

Pyrite exists in different forms, namely massive (chemically stable) and ‘framboidal’ (chemically unstable). The framboidal form is characterized by an agglomeration of very small cubic crystals (not visible to the naked eye) with a very large specific surface. In some conditions, this form of pyrite can oxidize in the presence of water and react with other minerals present in the same rock to form gypsum. Gypsum, when it forms, occupies a much greater volume than pyrite, causing swelling of the granular backfill. The swelling produces cracking and causes concrete floor slabs to heave. In some cases, especially in garages, the foundation walls may also crack and be displaced outwards.

The chemical solutions formed during pyrite oxidation can be absorbed by the concrete, causing the concrete floor slab to sulfatize and heave. The swelling thus has two constituent elements, namely swelling of the aggregate and intrinsic swelling of the concrete slab.

This chemical reaction is generally slow, and it takes between 10 and 15 years after the building is constructed before it is visible to the occupants. Slab displacement levels vary, but can be as high as 5 mm per year.

…

Most aggregates used as underfloor backfill contain pyrite and other sulphurs, but a very large percentage of buildings will never exhibit symptoms of pyrite-related problems. This is because pyrite found in hard rock with low clay mineral contents does not oxidize and the materials remain stable’.

11 7. At para. 4 of this judgment, the High Court Judge gave a clear description of the manner in which this phenomenon was alleged to have operated in the context of this case:

‘This mineral [pyrite], it is claimed, reacted with the 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.’

12 Obviously, as in this case, years can elapse before the problem manifests itself, especially if the tests carried out on the building are themselves insufficient, or the testing techniques are inadequate to detect and address the problem. In order to remedy this, a new standard was set in 2007 (EN13242:2002+A1:2007). This Standard introduced additional tests to address the problem of pyrite. It is not disputed in this case that the product supplied in 2004 would not have been compliant with this later, 2007, Standard.

13 The High Court Proceedings

14 8. The trial in the High Court lasted for 56 days and resulted in a judgment running to some 114 pages in length. The time at hearing was spent dealing, almost exclusively, with expert evidence on causation. In seeking to avoid liability, Irish Asphalt sought at one stage to blame both Elliott Construction and the engineers, Moylan Consulting. It also contended that the foundations had not risen, but rather that the building had sunk. It disputed pyrite heave had taken place, thereby, putting causation in issue. Much time and expertise was devoted to the science underlying the phenomenon of pyrite heave with national and international experts called on each side. At para. 10 of his judgment, the trial judge stated (a point which was reiterated at several points in this...