Mr Justice Peter Charleton delivered his judgment in James Elliott Construction Limited -v- Irish Asphalt Limited (High Court Record No. 2008/4767P) on 25 May 2011.  The trial lasted 58 days, 6 days for submissions and the rest for testimony with expert evidence taking up the majority of time.

Background

From 2004 to 2005, James Elliott Construction Limited (the “Plaintiff”) built the Ballymun Central Youth Facility.  Irish Asphalt Limited (the “Defendant”) supplied the Plaintiff with infill known as Clause 804 for the project.  Clause 804 is crushed rock, in this instance.

After practical completion in 2005, cracks began to appear in the ground floor walls.  These started out as hairline cracks and over time deteriorated to such an extent that the condition of the interior walls made the building unstable.  The Plaintiff remediated the building in 2009 at a cost of €1.55 million.

Plaintiff’s Claim
 
The Plaintiff claimed that the cracking was as a result of the abundant presence of a mineral called pyrite within the Clause 804 hardcore sold to it by the Defendant.  The Plaintiff claimed that that this caused the floors to heave upwards; making the opening of some doors impossible, buckling and cracking the walls severely and rendering the ground floor of the building effectively useless.

Pyrite

Pyrite is the main iron sulphide responsible for swelling and is found in several different types of rock, in low percentages (normally less than 1%).  Pyrite exists in different forms, namely massive (chemically stable) and framboidal (chemically unstable).  In some conditions, the framboidal form can oxidise 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.

Defence

The Defendant disputed the Plaintiff’s claim on the basis that it was an unproven theory and pleaded that if it was not established as a probability, the Court should dismiss the action.  Furthermore, the Defendant claimed that the building was badly constructed both as to the compaction of the infill and the stability of the foundations.  It also claimed poor engineering and design.  In particular, it argued that the Clause 804 material was not compacted properly and caused subsidence at different levels.  The Defendant stated that this would give, as regards the cracking of the floors, a similar appearance, to pyrite heave damage.  The Defendant also sought to rely upon its terms and conditions to relieve it of any liability in this matter, save for reimbursing the cost of the material.

Judgment

Mr Justice Charleton explained that it was crucial to a finding in favour of the Plaintiff that the floors heaved upwards because of pyrite and damaged the building.  Mr Justice Charleton explained that if it was proven that the floors heaved upwards, then there was no available evidence that this resulted from anything other than pyrite.  Expert witnesses gave evidence as to engineering, architecture, geology and petrography on each side but failed to agree on anything of importance.  Mr Justice Charleton stated this was a striking feature of the case.

Mr Justice Charleton held that it had been proven as a probability that the damage to the building came about as a result of pyrite.  Due to this presence of pyrite and the resulting effect, Mr Justice Charleton held that the hardcore material was not fit for the purpose for which it was bought and was not of merchantable quality.  In relation to the Defendant’s reliance upon its terms and conditions, Mr Justice Charleton held that the exclusion clause had not been incorporated into the contract by the Defendant as against the Plaintiff.  Even if it had been, Mr Justice Charleton held that it would be neither fair nor reasonable to enforce it in the context of this case.

In deciding that the exclusion clause was unfair and unreasonable, Mr Justice Charleton considered the Sale of Goods and Supply of Services Act 1980, which amended the original Sale of Goods Act 1893.  In particular, Mr Justice Charleton looked at Section 22 of the 1980 Act together with the Schedule to the 1980 Act.  Section 22 provides that an exclusion clause purporting to exclude the implied terms relating to quality and fitness for purpose may not be enforced unless shown to be “fair and reasonable”.  The Schedule to the 1980 Act sets out the criteria to be referred to in assessing what is “fair and reasonable”.  The test is that it should be fair and reasonable having regard to the circumstances which were, or ought reasonably to have been, known to or in contemplation of the parties when the contract was made. 

Mr Justice Charleton stated that the circumstances that ought reasonably to have been known to the parties in this case would have included the discovery by the quarry of the almost 3% by weight level of pyrite within the stone.  Furthermore, Mr Justice Charleton said that any builder would have expected that the Clause 804 material would fulfil the purpose of holding up a floor slab and, even more so, that it would not expand and ruin a carefully constructed building.  In considering the criteria set out in the Schedule to the 1980 Act, Mr Justice Charleton stated that he was satisfied that the Plaintiff neither knew or ought to have known of the existence and onerous extent of the exclusion clause and that nothing in terms of the custom of the trade of building would have alerted the Plaintiff to such a term.

It is worth noting that Mr Justice Charleton stated that it would have been unreasonable to expect the Plaintiff to test the material for pyrite, the cost of which testing would have been more than the value of the hardcore itself. 

Quantum

The quantum of damages due to the Plaintiff was not analysed in the judgment because the issue of quantum was deferred until liability was determined.  A hearing on quantum is scheduled to commence on 5 July 2011.  Once Mr Justice Charleton’s order is perfected, the Defendant has 21 days to serve a notice of appeal on the Plaintiff.

Contributed by Fionnualla Cleary and Liam McCabe.