James Elliott Construction v Irish Asphalt: Part 1 – the Irish courts

Irish Asphalt (IA) provided aggregates to James Elliott Construction (JEC) for use in construction of a youth centre in Ballymun in Dublin.   Aggregates are small stones, quarried and used as infill under poured concrete floors in buildings.     The aggregates supplied to JEC contained reactive pyrite; this mineral expands upon contact with air and water, cracking floor slabs and forcing walls built upon floor slabs to ‘heave’ upwards.

The building in this case began to show signs of pyrite damage within a short period following completion.

Remedial works were carried out by JEC, which then sued IA as supplier of the aggregates. Section 14 of the Sale of Goods and Supply of Services Act 1893 implies a term of merchantable quality into contracts for supply of goods, where the supplier is acting in the course of a business.   Damages were awarded to JEC in the Irish High Court in May 2011, on the basis that IA had breached the implied contractual term of merchantable quality.

So far, so good for JEC. IA, however, appealed to the Supreme Court. In December 2014, the Supreme Court referred the defence raised by IA by way of a request to the European Court of Justice (ECJ) for a preliminary ruling.     The court made clear, however, that as a matter of national law, it would uphold the High Court decision and find Irish Asphalt liable for breach of the implied term of merchantable quality:

‘..as a matter of national law, Elliott Construction would be entitled to succeed on the grounds that there was breach of both the express term as to the supply of aggregate described as Clause 804 and the implied term as to merchantability, and Irish Asphalt’s against the outcome of the High Court decision would fail.’

The judgment, however, could not be finalised until the outcome of the reference to the ECJ for a ruling on the questions that raised an issue of European law.  Amongst the questions referred was whether the implied term of ‘merchantable quality’ was incompatible with a harmonised standard applicable to aggregates.

IA argued before the Supreme Court that the evidence presented to the High Court had not established breach of the relevant standard, and that in finding a breach of the 1980 Act, that the High Court had effectively imposed a new standard, incompatible with the existing European and national standard and thus contrary to European law.   (There is a requirement under the Technical Standards Directive, Directive 98/34, for Member States to notify the Commission of draft technical standards, and Member States must not recognise, approve or use any national standards that have not been through the notification procedure.)

Before the ECJ issues a ruling, an ‘Advocate General’ issues an opinion.  The opinion is not binding on the ECJ, but the Court often follows the opinion, and indeed there are a number of examples of Advocate General opinions that were not followed by the ECJ but were nonetheless referred to in subsequent cases in support of particular arguments.  Therefore, the Advocate General’s opinion is reviewed closely by the parties and observers, as a steer on how the Court may answer the question put to it by the national court.   In Part 2 of this post, I examine the Advocate General’s opinion in the case, issued in February 2016.

 

 

 

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