Noreside Construction Ltd v Irish Asphalt Ltd

• Jurisdiction: Ireland
• Judge: Ms. Justice Finlay
• Judgment Date: 04 October 2011
• Neutral Citation: [2011] IEHC 364
• Court: High Court
• Date: 04 October 2011

[2011] IEHC 364

THE HIGH COURT

[No. 2593 P/2009]

[No. 21 COM/2009]

Noreside Construction Ltd v Irish Asphalt Ltd

COMMERCIAL

BETWEEN

NORESIDE CONSTRUCTION LIMITED

PLAINTIFF

AND

IRISH ASPHALT LIMITED

DEFENDANT

Abstract:

Commercial law - Contract law - Implied conditions - Terms and conditions - Indemnity - Whether the plaintiff's indemnity clause and the defendant's limitation clause were terms of the contract entered into by the parties.

Facts This judgment concerned the trial of the first issue in a modular trial directed by the Court on 21/12/10. The issue directed to be tried prior to other issues in the proceedings was "what were the terms of the contract between the plaintiff and the defendant (express or implied) for the purchase and sale of the aggregate, the subject matter of the proceedings". The plaintiff was a construction company who following the award of a contract by Dublin City Council to build a development ordered from the defendant's quarry aggregate in order to carry out its construction work. The plaintiff faxed a purchase order to the defendant on 26 March 2003 and gave evidence that such order was also posted on that date. The defendant stamped as received by post that order on 28 March 2003. The 'Purchase Order Conditions' were printed on the reverse side of the original purchase order but there was no reference to those conditions on the front side of the Purchase Order sent by fax. The defendant commenced supplying aggregate at the price agreed on 27 March 2003 and continued supplying same until May 2005. A delivery docket, signed by both parties accompanied each delivery and the docket stated on its face, "This material is sold subject to the terms and conditions available on request". In December 2008, the defendant informed the plaintiff that Pyrite was present in products purchased from its Baylane quarry and that any materials from that quarry should not be used as under floor infill in any building or within 500 millimetres of any concrete or steel structure. However, the aggregate supplied by the defendant to the plaintiff from the Baylane quarry had been so used by the plaintiff and the plaintiff was subsequently notified of claims against it arising out of the use of aggregates by the plaintiff in its development. Consequently, the plaintiff sought an indemnity from the defendant against the claims made against it, in particular, pursuant to clause 17 of its Purchase Order Conditions. The defendant refused to indemnify the plaintiff and consequently the plaintiff issued these proceedings seeking a declaration that the terms and conditions of the agreement between the parties were those set out on the reverse of the Purchase Order. The defendant contended that its standard terms and conditions, which were mentioned on its delivery dockets were incorporated in the contract or contracts either by way of signature or by reasonable notice of the prior delivery of documents or by a course of dealing. In particular the defendant sought to rely upon a limitation clause contained therein. In the alternative, the plaintiff contended that there was an implied condition regarding merchantable quality and the defendant submitted that there was implied by virtue of the custom and practice within the industry a term that in the event the goods were defective, the vendor's liability was limited to the cost of replacing the goods only. The defendant adduced evidence from an expert in support of this contention.

Held by Finlay Geoghegan J. in granting the plaintiff declaratory relief: That based on the evidence adduced it was clear that an oral agreement was reached between the parties on 26 March 2003 and there was a concluded agreement between the parties on 27 march 2003 as to the terms on which the defendant would supply aggregate to the plaintiff for the duration of its construction contract. The plaintiff did not, on or before 26 March bring to the attention of the defendant its purchase order conditions. It was an undisputed fact that the defendant did not draw to the attention of the plaintiff its terms and conditions on or before 26 March. The delivery dockets issued by the defendant were all post-contractual documents and did not have the effect either of making a new contract or of varying the existing contract. Furthermore, it was not the case that each delivery constituted a new and distinct contract. Consequently, neither the plaintiff's purchase order conditions nor the defendant's terms and conditions, expressly or by implication, formed part of the contract between the parties. The evidence adduced by the defendant fell short of establishing a custom of the type contented for. However, there was an implied condition that the goods supplied by the defendant under the contract were of merchantable quality and there was no evidence to support any exclusion of that condition pursuant to s. 14(2)(a) or (b) of the Sale of Goods Act 1893 as amended.

Reporter: L.O'S.

1 1. This judgment is given on the trial of the first issue in a modular trial directed by the Court on 21 ^st December, 2010. The issue directed to be tried prior to other issues in the proceedings is "what were the terms of the contract between the plaintiff and the defendant (express or implied) for the purchase and sale of the aggregate, the subject matter of the proceedings".

Background to the Proceedings

2 2. The plaintiff is a construction company with its head office in Kilkenny. The defendant is the operator, inter alia, of a quarry at Baylane, Dublin, at which it produces, manufactures and supplies products to the construction industry.

3 3. In early 2003, the plaintiff was awarded a contract by Dublin City Council to build a development of 52 houses and 31 senior citizen units at Griffith Avenue, Finglas, Dublin. The plaintiff, through Michael Regan, a director with responsibility for procurement, made enquiries of a number of persons, including the defendant, in relation to the supply of aggregate for the development at Finglas. Following exchanges between the plaintiff and the defendant, which will be referred to in greater detail below, a Purchase Order No. 19027 ("the Purchase Order") was faxed to the defendant on 26 ^th March, 2003. The original Purchase Order was sent by post, the plaintiff contends, as a matter of probability, on the same day, and is date stamped as received by the defendant on 28 ^th March, 2003. The plaintiff's "Purchase Order Conditions" were printed on the reverse side of the original Purchase Order sent by fax and received, at the latest, by the defendant, on 28 ^th March, 2003. There is no reference to such conditions on the front side of the Purchase Order sent by fax on 26 ^th March, 2003.

4 4. The Purchase Order set out the price agreed for each of four different types of stone, both for collection and delivery. It also specified the credit terms of 60 days and that the price was fixed for the duration of the contract. It is not in dispute that such terms were agreed.

5 5. The defendant commenced supplying aggregate at the price agreed on 27 ^th March,2003. It continued to supply until May 2005. For each delivery, there was a delivery docket signed on behalf of the defendant and on behalf of the plaintiff (either by a site employee or a haulier on its behalf). Each delivery docket stated, on its face, at the bottom, "THIS MATERIAL IS SOLD SUBJECT TO THE TERMS AND CONDITIONS AVAILABLE ON REQUEST".

6 6. In December 2008, the defendant informed the plaintiff that Pyrite was present in products purchased from its Baylane quarry and that any materials from that quarry should not be used as under floor infill in any building or within 500 millimetres of any concrete or steel structure. The aggregate supplied by the defendant to the plaintiff from the Baylane quarry between March 2003 and May 2005, had been so used by the plaintiff in the Griffith Avenue site.

7 7. In December 2008, and thereafter, Dublin City Council notified the plaintiff of claims arising out of the use of aggregates by the plaintiff at the development. The plaintiff notified the defendant of such claims.

8 8. In 2009, the plaintiff sought an indemnity from the defendant against the clams made against it, in particular, pursuant to clause 17 of its Purchase Order conditions. This was refused and it was denied that the Purchase Order conditions formed part of the agreement between the plaintiff and the defendant for the supply of aggregate.

9 9. On 19 ^th March, 2009, the plaintiff issued the present proceedings, seeking, inter alia, a declaration that the terms and conditions of the agreement between the plaintiff and the defendant are as set out on the reverse of the Purchase Order; a declaration of its entitlement to an indemnity and further and consequential relief including damages for breach of contract.

10 10. In the pleadings delivered, including an amended Statement of Claim and amended Defence, it became clear that the plaintiff's primary contention was that the terms of the supply agreement between the plaintiff and the defendant included those set out on the reverse of its Purchase Order. Further, that the defendant's primary contention was that its standard terms and conditions, to which reference was made on its delivery dockets and, as initially contended referred to in communications from the defendant to the plaintiff prior to March 2003, were incorporated in the contract or contracts. Alternative contentions in relation to applicable terms and conditions were pleaded by both parties. In addition, other issues are raised in the proceedings which can only be determined after determination of the applicable terms and conditions to the contract or contracts under which the aggregate was supplied by the defendant to...