Originally published in the Commercial Litigation and Dispute Resolution Newsletter Winter 2011.
Potential changes to Ireland's sale of goods legislation are unlikely to impact on the ongoing pyrite cases. It has been alleged that, during Ireland's Celtic Tiger construction boom, some of the stone infill used in the foundations of houses and other buildings, contained too much of the mineral, pyrite, which causes structural problems.
The Expert Group(8) that is reviewing the sale of goods legislation has recently reported that exemption clauses which seek to limit the liability of the seller of goods such as infill should remain in place and remain 'subject to a test of fairness in business contracts'.
This follows a ruling in the recent case of James Elliot Construction Limited v Irish Asphalt Limited(9), in which Mr Justice Peter Charleton, citing the Irish sale of goods legislation, stated that the infill supplied by Irish Asphalt to James Elliot was not fit for purpose nor of merchantable quality. The pyrite in the infill caused the floors in a building constructed by James Elliot to heave upwards and gave rise to structural damage.
Irish Asphalt sought to rely upon an exclusion clause, which it argued relieved it of any liability, save for reimbursing the cost of the infill. The Judge held that the exclusion clause was not adequately notified to the purchaser. The only evidence of the exclusion clause being notified to James Elliot was on the back of credit notes for rebates; this was insufficient. In any event, the Judge held that the exclusion clause was 'unfair and unreasonable' in accordance with the legislation, as the cost of the damage so far outweighed the refund of infill cost. This decision in currently under appeal to the Supreme Court.
Following the Irish Asphalt ruling, it has been reported in the media that HomeBond, a building warranty provider, circulated a letter to homeowners of affected properties, stating that, as this is a product liability issue, it will no longer process any claims in relation to pyrite and that any agreed settlements would be revoked. It was also reported that the Minister for the Environment, Phil Hogan TD, has announced the establishment of a Pyrite Panel to seek to identify a way forward on pyrite contamination in private housing through engaging with the construction industry and affected homeowners.
Footnotes
8. Report on the Legislation Governing the Sale of Good and Supply of Services - 14 July 2011
9. [2011] IEHC 269
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