Record No 384/2011

IpsofactoJ.com: International Cases [2014] Part 12 Case 6 [SCIre]


SUPREME COURT OF IRELAND

Coram

Irish Asphalt Ltd

- vs -

James Elliot Construction Ltd

O’Donnell J

MacMenamin J

Dunne J

2 DECEMBER 2014


Judgment

O’Donnell J, MacMenamin J & Dunne J

Introduction

  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.

  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.

  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?

  4. This judgment will consider:

    1. The findings in the High Court;

    2. The issue of implied terms under the Sale of Goods and Supply of Services Act 1980 (“the 1980 Act”);

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

    4. Issues which arise under European Union law.

    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.

    Clause 804

  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.

  6. Pyrite Heave

  7. 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:

  8. Pyrite (FeS²) 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.

  9. 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:

  10. 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.

    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.

    The High Court Proceedings

  11. 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 judgment) that:

  12. The most striking feature of this case was the inability of the experts as to engineering, architecture, geology and petrography on each side to agree on anything of importance to the case.

    The Ballymun Building Contract

  13. The contract between Elliott Construction and Ballymun Regeneration for the construction of the building, to which Irish Asphalt was, of course, not a party, was contained in several documents. The High Court Judge noted that these documents were “in some potentially important respects, potentially a source of confusion” (para. 25). A series of specifications made up this documentation such as the engineering specification and the general specification of the architect. These specifications included drawings and Patrick Elliott, the principle in Elliott Construction, and Mr Martin Hannay, the foreman, laid emphasis in their evidence in the High Court on the primacy of these drawings but also emphasised the importance given to the instructions of the engineer, and occasionally the architect, on site. These instructions were sometimes noted by Mr Hannay on the contract documents but sometimes the oral directions were not recorded. Irish Asphalt argued that this was a breach of contract because according to the engineering specification, if any discrepancies were found between the documents, the contractors were supposed to inform the architect and a more formal process should have ensued. The trial judge found that Mr Elliott and Mr Hannay were correct in their approach to the primacy of the drawings over the written contract clauses and that they had consulted the engineers and architects on site as appropriate.

  14. Specification of Clause 804

  15. The engineering specification also contains several references to the best type of material and equipment being used in the works. It is specified that the sub-base material “shall comply with clause 804 granular material type B of the specification for road works issued by the Department of the Environment”. The relevant drawing states in relation to the internal floors that they will consist of “a 150mm pc concrete slab with a 1.42 layer of mesh on dpm [damp proof material] insulation and radon barrier to architects detail on 225 mm of well-compacted hardcore clause 804 to D.O.E. [Department of Enterprise] specification.” The trial judge accepted that this provision was the most important provision and overrode all other provisions. The judge found that the Clause 804 infill was a known standard within the building industry and one on which “Elliott Construction was entitled to rely in ordering, paying for and in accepting deliveries” (para. 40). The provision of Clause 804 was thus a term of the contract between Elliot Construction and Irish Asphalt. The evidence of Dr Michael Maher, consultant engineer with Golder Associates Canada, on what this meant was accepted. Dr Maher was retained by Elliott Construction as an expert witness. He is an expert in geotechnical engineering and construction methods and former President of the Canadian Council of Independent Laboratories. Dr Maher testified in 2010, having been involved in investigating pyrite issues since 2007. He stated that Clause 804 is manufactured to have particular characteristics and that builders purchasing it have an entitlement to rely on that understanding. The judge found as a fact at para. 40 of his judgment that:

  16. Clause 804 is, in fact, a material superior to what is usually needed for construction infill and underfloor support. It is manufactured and sold on the basis that it is a high quality product. The fundamental requirement for Clause 804 as a construction infill is that it should do the job that it is intended to be used for. This characteristic can be broken into: firstly, that the material must be inert and not subject to chemical change; secondly, that the material is durable and should not break down due to temperature within the expected limits of the relevant site and moisture within the expected limits of the relevant climate; thirdly it must be strong enough for its purpose; and, fourthly, when used for roads, the material should not wear, breakdown or polish so that any surface designed to have a particular level of friction becomes polished and slippy.

    The trial judge identified the central issue as being whether, in the event that pyrite heave was proven to have ruined the building, the Clause 804 hardcore infill was supplied in breach of contract.

    The European and Irish Standard

  17. Clause 804 is an aggregate for which a European Standard exists. This is EN13242:2002, “Aggregates for unbound and hydraulically bound materials for use in civil engineering work and road construction”, which was adopted by the European standardisation body, Le Comité Européen de Normalisation (“CEN”), in December 2002. CEN is a private body established under Belgian law. Its members are the national standardisation bodies of European countries, including but not limited to the standardisation bodies of the Member States of the EU. The rules of membership of CEN require the national bodies to adopt European standards once adopted by CEN. The Irish standardisation body is the National Standards Authority of Ireland (“NSAI”) established pursuant to the National Standards Authority Act 2006. The NSAI adopted and issued an Irish standard in terms identical to EN13242:2002, in January 2003. That standard is I.S. EN13242:2002. A standard adopted by the NSAI does not take effect as law or have legal force of its own effect. It may however be incorporated into specifications and contracts by parties.

  18. Standards are referred to in the law of the EU in two ways relevant to the present proceedings. Under Council Directive 89/106/EEC (21st December 1988) on the approximation of laws, regulations and administrative provisions of the Member States relating to construction products (“the Construction Products Directive”), the European Commission may issue a mandate to CEN to produce a standard in a particular area. Furthermore, Directive 98/34/EC of the European Parliament and the Council (22nd June 1998) laying down a procedure for the provision of information in the field of technical standards and regulations (“the Technical Standards Directive”), as amended by Directive 98/48/EC of the European Parliament and of the Council (20th July 1998) amending Directive 98/34/EC laying down a procedure for the provision of information in the field of technical standards and regulations, imposes certain obligations on Member States in respect of notification of national standards, and observing a standstill period when a European standard is being adopted. The impact of these Directives will be considered later in this judgment. For present purposes it is sufficient to observe that Elliot Construction claimed, and the High Court agreed, that the terms of standard I.S. EN13242:2002 were incorporated into the contract between the parties hereto by the reference to Clause 804, and that accordingly, the product supplied had to conform to that standard.

  19. Breach of the Standard

  20. The trial judge found (on the basis of evidence that Irish Asphalt now contends on appeal was inadmissible) that there was a comprehensive failure to meet the standards prescribed for aggregates and therefore Clause 804. The trial judge also found that the terms of merchantability and fitness for purpose implied by the 1980 Act meant that Clause 804 was understood and expected to be of sufficient inertness, strength and durability so as not to expand or move or heave, or cause damage to any building. The deficiencies in the Clause 804 supplied were analysed under a number of headings. To be fit for purpose and of merchantable quality, the material had to be inert and not subject to chemical changes. Second, the material had to be durable, and not break down due to temperature within the expected limits of the relevant site, and moisture within the expected limits of the relevant climate. Third, the product had to be strong enough for its purpose. Fourth, when used for roads, the material should not be susceptible to wear, breakdown or polish so that any surface designed to have a particular level of friction should not become polished or slippery. The judge held that as a matter of national law, these matters were part of the contract by virtue of the implied terms as to fitness for purpose and merchantability.

  21. The European Standard adopted in Ireland contains or refers to a number of tests to which aggregate of this nature should be subjected. Much of the findings both of alleged breach of the Standard, and the more general findings of breach of the implied terms of merchantability and fitness for purpose, were based on the evidence given in relation to these tests. It is worth noting at the outset that the trial judge strongly preferred Elliott Construction’s expert evidence as to causation. He concluded at para. 267:

  22. Given the absence of any other cause, apart from pyrite heave, which could result in the floors moving upwards, the monitoring results are, coupled with this evidence enough to prove the plaintiff’s case.

    The Test Results

  23. The findings of the High Court on the tests can be briefly summarised. The Court found that that the material taken from the Ballymun building and tested in 2009 failed to meet the standard in respect of the Los Angeles abrasion test (para. 157 of the High Court Judgment), the magnesium sulphate soundness test (para. 158) the liquid limits test (para. 159) and the water absorption test (para. 160). The judge also quoted the written opinion of Mr Lloyd Twomey, whose evidence he accepted, at para. 162:

  24. The overwhelming majority of the material tested for this report is [on aggregate from Bay Lane quarry removed from the building]. All of the Bay Lane aggregate tested fails at least two of the Clause 804 requirements, while of the remaining tests, between 47 and 97% of the Bay Lane sample tested failed the requirements for Clause 804 material. These tests, which indicate the overall quality of the aggregate in terms of grading, clay content, plasticity, strength, a resistance to wear, ability to absorb water and ability to resist chemical weathering, show that the material may be classified as a poor quality aggregate. In summary:

    97% of Bay Lane aggregate tested is outside the Clause 804 grading curve typically at the ‘fines’ end indicating an excess of fines.

    100% of Bay Lane aggregate tested is in excess of the specified liquid limit of 21 ranging up to 41%, and in some cases having a plastic limit measured up to 28% (Clause 804 should be non-plastic). This suggests that the fines present are behaving in plastic manner and suggests that the source material is of poor quality, such as a mud stone. A material with excessive plastic clay materials will have low strength, will be sensitive to moisture and will reduce the cohesion and shear strength of the aggregate.

    87% of the Bay Lane aggregate tested had LA abrasion test values in excess of the specified limit of 30. This suggests that the material is weak, has low abrasion resistance and is more prone to degradation, relative to Clause 804 aggregate.

    100% of the Bay Lane samples has 10% fines value below the SR21 equivalent requirement of 130 kN with the maximum value achieved of 65kN. This suggests that the material is weak and is prone to physical breakdown, in comparison to the Clause 804 aggregate.

    47% of the Bay Lane aggregate tested for flakiness index, had values in excess of the specified limit of 35. This suggests that the aggregate has a platy habit (i.e. flat and thin) indicative of a laminated or closely bedded source material. Flaky aggregate physically has lower strength than blocky aggregate and typically does not compact into as dense a matrix as blocky aggregate will.

    100% of the Bay Lane aggregate tested for magnesium sulphate soundness test has values in excess of the specified limit of 25%, with the maximum value measured of 76%. This test simulates the ability of an aggregate to resist weathering. This test is also related to the water absorption test, where an aggregate with high water absorption value tends to have a low soundness.

    93% of the Bay Lane aggregate tested for water absorption had valued in excess of the specified value of 2% indicating that air and moisture can penetrate into the aggregate. Strong aggregate tends to have low water absorption values below 1%.

    While the above tests are relevant to the performance of the material as an aggregate, they are also relevant to the ability of the material to weather and to resist expansive forces. The material is shown to allow moisture and air to penetrate into the body of the aggregate. This means that moisture can attack any minerals contained within the aggregate, such as pyrite and cause it to break down.

    The material is shown to be flaky, indicative of a laminated/closely bedded fine-grained structure within aggregate. This means that the aggregate is likely to have anisotropic strength and potential weaker those within the fragments.

    The material is shown to have poor strength and durability, which means that one expansive forces begin to exert on the material and once weathering begins, the material is more likely to break down.

    The material is shown to have a low soundness and resistance to weathering processes, which means it is susceptible to breaking down and is unlikely to be able to resist expansive forces.

    All the above indicates that the material supplied to the Ballymun Youth Centre from Bay Lane quarry was of poor quality, could not be classified as Clause 804 is susceptible to break down by pyrite oxidation and is unlikely to be unable to resist expansive forces within the aggregate’.

  25. It was concluded that (para. 165):

  26. The foregoing analysis on tests of water absorption, Los Angeles abrasion, liquid limits and magnesium sulphate soundness renders the plaintiff’s case of pyrite heave more likely. It supports the physical findings in relation to the building that pyrite heave took place. Therefore, the finding that the foundations are stable, together with the analysis of what the tests on the infill under the building demonstrate and the state of the building itself, establishes a probability of pyrite heave.

    Later, the judge observed at para. 241 of the judgment:

    I regard it as central to the contracts between Elliott Construction and Irish Asphalt, that the material to be supplied carried the characteristics of Clause 804 hardcore infill as had been established through use by numerous builders over the years since 1972. It would be completely contrary to the purpose for which that material was required for it to swell up when used as infill under buildings and ruin floors and buckle walls.

  27. It is necessary here to deal briefly with a further issue in respect of the Standard which occupied a significant part of the argument in the High Court, but which can be dealt with briefly here, although it will be necessary to return to it later in more detail. Elliot Construction also argued that the Clause 804 was required to have a sulphur level of less than 1%. This is potentially an important category since it was found that the material tested had a sulphur content of 1.41% (para. 125). Sulphur content is an indicator of the presence of pyrite which was found to amount to 1.5% by volume and 2.7% by weight in the Clause 804 put under the building (para. 111). The High Court found that European Standard EN 13242:2002 (and the Irish standard in identical terms) contained three possible categories of requirement for total sulphur (para. 115) and that a guidance note on the use of EN13242:2002 issued by the NSAI in 2004, S.R. 21:2004, constituted the relevant guidance and set a standard of 1%. This was hotly contested by Irish Asphalt which argued that there was no standard fixed for sulphur content. This is not relevant here however (although it becomes relevant later) since first, the High Court held that a finding of breach of the sulphur limit on its own, while establishing breach of contract, would not in itself require the remedial works carried out (since if excess sulphur alone was detected the appropriate action would be to monitor the building rather than carry out extensive remediation) and second, because the High Court made comprehensive findings of breach of the standard on other grounds which, subject to the legal arguments discussed later, would be sufficient to sustain the finding of breach of contract by reference to the Standard. As stated above the judge concluded at para. 161:

  28. Thus on the water absorption test, the liquid limits test, the magnesium sulphate soundness test and the Los Angeles abrasion test, the material removed from the building in Ballymun clearly fails the Clause 804 standard. This establishes a breach of contract.

  29. It appears that this amounts to a finding that the material breached the Standard as of the date of testing and, as a matter of probability, at the date of supply. At para. 148 the judge observed:

  30. On the entire of the evidence, however, I cannot see that rock is likely to change in nature so fundamentally as the differential between the test results from 2004, the apparently routine quarry tests, to 2009, the tests on the infill from under the building, suggest, simply because it has been consolidated and left under a floor slab for five years. Rather, I am satisfied, on the basis of the evidence of Dr. Maher, for the plaintiff, that the difference in these tests cannot be accounted for in consequence of the treatment of the Clause 804 infill at the time of construction or its presence under the building for a period of nearly five years prior to being removed and tested. The test results from 2003 and 2004 are not consistent with the material seen and tested by Golder and Arup [on behalf of Elliot Construction]. If the material was of good quality it would not change.

  31. The judge also addressed the argument that the test results had not been conducted in precise accordance with the testing protocols referred to in EN13242:2002. He rejected that argument at para. 164:

  32. Many test results were challenged by an allegation of deviation from a standardised procedure. It was argued, in addition, that no standard testing protocols were available in respect of stone infill that had been dug out from under a building after several years supporting a floor slab. The precise methodology of the test can vary. What is important to the Court is the nature of the information it provides. Using a different test to that specified in the standard may, in some instances, indicate that a fail is a breach of contract. Using the correct test is a more direct methodology. I appreciate that the Clause 804 tests are applicable to stone tested directly from a quarry as in 2004. Tests on underfloor infill that has gone wrong are not given by an Irish or European standard. What, however, a reasonable person wants to know in a case like this is what has gone wrong. What the tests do is to provide a route towards a reasoned analysis. What is important to the Court is that information is supplied that can lead to a conclusion based on probability.

    Terms Implied under the Sale of Goods and Supply of Services Act 1980

  33. The High Court Judge held that the contract between Elliot Construction and Irish Asphalt contained terms of merchantability and fitness for purpose implied by ss. 14(2) and 14(4) of the Sale of Goods Act 1893 (“the 1893 Act”) as inserted by s. 10 of the 1980 Act. These terms, he considered, required that the Clause 804 supplied should be inert, strong and durable (para. 41). It was found that these terms had been breached, relying on the evidence already set out in respect of the findings of breach of the Standard. However the judge also made findings of breach on the basis of evidence of other tests, including swelling tests (paras. 166-176), minute scrutiny (paras. 177-209), monitoring results (paras. 216-227), and statistical analysis (paras. 228-232). Irish Asphalt challenged the expertise of the evidence of the experts who gave evidence on behalf of Elliot Construction, particularly on the issue of minute scrutiny, but as is apparent the findings of the High Court rest on a number of independent grounds and accordingly this Court does not consider it necessary to address this further.

  34. The judge considered results from tests done on the samples of rock at the Bay Lane Quarry, Irish Asphalt’s quarry, between 2003 and 2005, and on infill material removed from the Ballymun building when the problems manifested themselves. He observed that it emerged eventually at the hearing that Irish Asphalt had itself done its own tests on the material removed from under the building in 2009, although, as already observed, its case is that the only admissible tests were those carried out in accordance with specified protocols at the point of supply, and at the time the aggregate was taken from the quarry. The 2009 evidence was at least in certain respects even more damning of the product. The evidence which is described hereafter and which formed the basis of the trial judge’s conclusions as to the quality of the product, is normally admissible as a matter of Irish law as to compliance with implied terms.

  35. At the conclusion of his judgment the trial judge stated at para. 268:

  36. Any one of the following pieces of evidences would have entitled the plaintiff to succeed: the monitoring results showing the floor slab rising while the foundations remain essentially static; the crystal heave evidence; the swelling tests; the state of the building showing heave coupled with failure of the infill material on crucial tests; or the chemical test results on the infill coupled with the necessity to remove it because of danger to concrete elements. Because of the state of the evidence, I have no option but to find in favour of the plaintiff on four of these five elements. Had there been only one finding for the plaintiff, I would still be obliged to find in favour of the plaintiff because a probability is thereby established. I have analysed the evidence separately in each of those blocs in order to come to that conclusion. I have based no conclusion, on this separate re-analysis of the evidence, on the bulk chemistry tests. I therefore hold for the plaintiff on the basis that the foundations are sufficient and stable coupled with the nature of the material under the floors; coupled with the monitoring results; coupled with the swell tests; coupled with the crystal heave evidence. Each of these is separate. Cumulatively, I also hold for the plaintiff in respect of any combination of these findings coupled with the foundation stability finding.

    The judge rejected any accusation of bias against Irish Asphalt’s experts. He considered they had carried out their testing in a fair and appropriate manner.

    The Appeal

  37. Irish Asphalt has put forward a number of interrelated arguments on appeal. Whilst accepting that its contract contained the terms implied by the 1980 Act, it is denied that the facts found amount to a breach of either of the implied terms of merchantability and fitness for purpose. Furthermore, it is contended that under the provisions of the contract, any liability for breach is limited by Clause 8 of its terms and conditions of sale which purported to limit liability for defective goods to the cost of their replacement. In respect of the findings of breach of the standard, and accordingly a failure to supply Clause 804 in accordance with the contract, Irish Asphalt contends that such breach was not established in the only manner in which such an issue could be determined and that accordingly the only admissible evidence heard in the High Court was of compliance with the standard. Finally, it is argued that it was not open to the High Court to make any finding of a breach of the terms implied by the 1980 Act and in particular to make a finding that there was a breach of implied terms as to inertness, durability and strength, because to do so was to create a new domestic law standard which was, it is argued, impermissible as a matter of the law of the European Union.

  38. Irish Asphalt sought to rebut a wide range of findings of fact made by the trial judge, which were clearly supported by weighty evidence. This attempted challenge to the High Court Judge’s findings of fact was at variance with the jurisprudence of this Court regarding findings of fact supported by evidence and inferences based thereon, and as identified in Hay v O’Grady [1992] 1 I.R. 210 and Northern Bank Finance Corporation Ltd v Charlton [1979] I.R. 149. There is no doubt that there was evidence before the High Court Judge which allowed him to reach his conclusions. Arising from this, Irish Asphalt effectively abandoned its appeal insofar as it related to the issue of alternative causation, but maintained that, notwithstanding the findings of fact made, particularly the finding that the damage to the building was caused by pyritic heave, it was not liable to Elliott Construction as a matter of law both domestic and EU.

  39. Irish Asphalt makes two closely related points which it is necessary to identify and analyse separately. First, it says that the evidence of the 2009 testing of the materials taken from the Civic Centre is simply nihil ad rem. It does not and cannot prove breach of the Standard. It says that in certain respects the tests were not carried out in accordance with the protocols identified in the Standard, and more importantly, were not carried out in the time indicated, namely at the time of delivery. In essence, it is contended that the Standards (and therefore the contract insomuch as it required delivery of Clause 804 conforming to those Standards), required that the material meet the relevant tests as of the date of delivery. Indeed, insomuch as the standardisation of national standards is required as part of a single market, in order to facilitate the putting on the market of products from different Member States, it might be said that the obvious point at which compliance with the Standard has to be demonstrated is precisely when the product is being placed upon the market. There was no serious contest but that Irish Asphalt’s data showed that tests had been carried out on samples of the quarry material throughout the relevant period, all of which (subject to the sulphur issue discussed above, and where Irish Asphalt had not tested for sulphur) showed compliance with the Standards, at those times. Accordingly Irish Asphalt contended that, at a minimum, resolution of this issue required a resolution of an issue of European law, namely whether compliance (or breach) of the Standards could only be established as of the point of delivery and by use of the testing protocols referred to in the Standard. Perhaps put another way, the argument was that if the Standards required that the product meet the relevant Standards at the point of delivery and then only, then to demand that they meet the tests some five or more years later, would be to impose a new standard, incompatible, with the existing European and national standard and thus, it was said, contrary to European law.

  40. The second argument made by Irish Asphalt in relation to this evidence was insomuch as it related to the separate national law question of whether there was a breach of implied term as to merchantable quality and fitness for purpose. In this respect it accepted, at least tacitly, that such evidence was admissible as evidence of breach of the implied terms as indeed it was. However, it was contended firstly that there had been no breach of either implied terms as a matter of national law, or, and secondly, that if there was, such a conclusion was not permissible as a matter of EU law, or, and again at the very least, that this raised an issue which it was necessary to refer for the consideration of the Court of Justice of the European Union (“CJEU”). It is accordingly necessary to consider the domestic law issues which arise since, if Irish Asphalt is correct in these respects, the consequential issues of European law which they contend arise, are certainly reduced if not removed.

  41. Merchantability and Fitness for Purpose

  42. As already observed , the trial judge concluded that, on the facts found, there had been a breach of the conditions as to merchantability and fitness for purpose implied by s. 14 of the 1893 Act as inserted by s. 10 of the 1980 Act. Irish Asphalt’s appeal on this aspect raises narrow but important issues of law. Accepting as it must, for the purpose of this aspect of the appeal, the facts as found by the trial judge, Irish Asphalt argues nevertheless that there was no breach of the implied condition of merchantability under s. 14(2), and that the implied condition of fitness for purpose under s. 14(4) did not arise. As already mentioned these arguments did not loom large in the High Court where detailed and complex issues of fact and science dominated. However, these matters have been the subject of careful and focussed submissions in this Court.

  43. Merchantability

  44. There is no dispute that as this was a sale in the course of business, there was implied into the contract a condition that the goods supplied would be of merchantable quality, pursuant to s. 14(2) of the 1893 Act (as substituted by s. 10 of the 1980 Act). Section 14(3) of the same Act (again as substituted by the 1980 Act) provides a statutory definition of the concept of merchantable quality. It provides:

  45. Goods are of merchantable quality if they are as fit for the purpose or purposes for which goods of that kind are commonly bought and as durable as it is reasonable to expect having regard to any description applied to them, the price (if relevant) and all the other relevant circumstances, and any reference in this Act to unmerchantable goods shall be construed accordingly.

  46. In simple terms, Irish Asphalt accepts, as it must on the findings of the trial judge and subject to the issues raised by the other grounds of appeal, that the Clause 804 supplied by them was unfit for the purpose of being used as hardcore under the cement floors of the Ballymun building. However, it argues that this does not amount to a breach of the implied condition of merchantability because the Clause 804 was fit for the purpose of being used as hardcore under car parks or non-load bearing areas around the building, where indeed it was used in the course of this development. It is contended that the fact that the product could be used for this separate purpose means that the product was merchantable within the meaning of the 1893 Act.

  47. Decisions of the courts of other common law jurisdictions are of persuasive authority. The argument that a product is merchantable if it is shown to be fit for one purpose for which it is used is almost entirely dependent upon the decision of the Court of Appeal of England and Wales in Aswan Engineering Establishment Co. v Lupdine Ltd [1987] 1 W.L.R. 1 (“Aswan”), and in particular, the careful analysis of Lloyd L.J. in that case. To understand the legal issue it is necessary to trace the statutory development of s. 14 of the 1893 Act, both in the UK and in Ireland. It is indeed a further complication of this argument that as a result of the statutory changes Aswan is now only of historical interest in the law of the UK and has not been further discussed or analysed in that jurisdiction, but, it is argued, correctly represents the law in Ireland.

  48. The concept of statutory implied terms can be traced to the 1893 Act. Section 14 of that Act originally contained versions of the two warranties of merchantable quality and fitness for purpose which are at issue in this case, albeit in different format, and in a different order. Section 14 of the 1893 Act as originally enacted provides: –

  49. Subject to the provisions of this Act and of any statute in that behalf, there is no implied warranty or condition as to the quality or fitness for any particular purpose of goods supplied under a contract of sale, except as follows:

    (1)

    Where the buyer, expressly or by implication, makes known to the seller the particular purpose for which the goods are required, so as to show that the buyer relies on the seller's skill or judgment, and the goods are of a description which it is in the course of the seller's business to supply (whether he be the manufacturer or not), there is an implied condition that the goods shall be reasonably fit for such purpose, provided that in the case of a contract for the sale of a specified article under its patent or other trade name, there is no implied condition as to its fitness for any particular purpose:

    (2)

    Where goods are bought by description from a seller who deals in goods of that description (whether he be the manufacturer or not), there is an implied condition that the goods shall be of merchantable quality; provided that if the buyer has examined the goods, there shall be no implied condition as regards defects which such examination ought to have revealed.

  50. It is notable that the 1893 Act did not originally provide any definition of merchantability. Merchantable quality is, as the Sales Law Review Group chaired by Professor Robert Clark observed in its 2011 Report on the Legislation Governing the Sale of Goods and Supply of Services, an archaic term (p. 157). It is redolent of an earlier age where merchants traded commodities both for use and for resale. As the English and Scottish Law Commissions noted in 1987 in their Report on the Sale and Supply of Goods (Law Com No. 160 and Scot. Law Com. No. 104) (para. 3.7);

  51. the word ‘merchantable’ was derived from Victorian cases where (putting the matter at its simplest) the question was, ‘were the goods were of such a quality that one merchant buying them from another, would have regarded them as suitable?’

    But the archaic and somewhat mysterious nature of the concept of merchantability also allowed the term to be deployed with some flexibility in assessing whether goods supplied were of adequate or sufficient quality so that a purchaser could not reject them. There was perhaps a tension between different conceptions of “sufficient quality” which was obscured by use of the term “merchantable”. Thus for example, in Bristol Tramways Carriage Co. Ltd v Fiat Motors Ltd [1910] 2 K.B. 831, Farwell L.J. stated that the term meant that the article is of “such quality and in such condition that a reasonable man acting reasonably would after a full examination accept it” (p. 841). On the other hand in Taylor v Combined Buyers Ltd [1924] N.Z.L.R. 627, Salmond J. criticised the approach and stated that (para. 645):

    The term ‘merchantable’ does not mean of good, fair or average quality. Goods may be of inferior or even bad quality but could yet fulfil the legal requirement of merchantable quality. For goods may be in the market in any grade good, bad or indifferent, and yet all equally merchantable .... If the buyer wishes to guard himself in this respect he must expressly bargain for the particular grade or standard that he requires.

  52. This difference of approach reflects perhaps a difference of perspective: from the purchaser’s point of view, ‘acceptability’ is the key feature whereas a vendor will looks to saleability. The development of the law has seen a gradual movement from reflecting the seller’s viewpoint to a position more sensitive to that of the purchaser, especially when a consumer. It can be seen that the 1893 Act is framed in terms of a general rule against any condition or warranty as to fitness to which the terms implied are an exception, whereas today it is probably more realistic to see s. 14 as imposing minimum criteria which in consumer cases cannot be excluded. An influential approach was that of Dixon J. in the High Court of Australia in Australian Knitting Mills Ltd v Grant (1933) 50 C.L.R. 387 at p. 418, where he suggested that:

  53. The condition that goods are of merchantable quality requires that they should be in such an actual state that a buyer fully acquainted with the facts and, therefore, knowing what hidden defects exist and not being limited to their apparent condition would buy them without abatement of the price .... and without special terms.

  54. This test was referred to with approval by the House of Lords in Henry Kendall & Sons v William Lillico & Sons Ltd [1969] 2 A.C. 31. However, relatively few cases have required this degree of analysis of the term ‘merchantable’. For the most part, the term has been sufficiently flexible and sufficiently understood to provide an acceptable vehicle for decisions in individual cases. It is only in particularly difficult and strict cases (and the appellant contends that this is such a case), that the test became difficult.

  55. The case of Henry Kendall & Sons v William Lillico & Sons Ltd is in fact an example of a case which was difficult in this way. In this case, the plaintiff game farmers bought compounded meal from the defendant for feeding to pheasants and partridges and their chicks which they reared for stock and sale. As a result of feeding them this meal, many of the chicks died, or were stunted and unfit for breeding purposes. It was found by the trial judge that this was caused by the presence in the compounded meal of a proportion of Brazilian ground nut extraction which contained a toxic substance known as aflatoxin. The ground nut extraction had been bought from two third parties, which in turn had bought it from fourth parties who had imported it from Brazil. The case was further complicated by the fact that there were different terms and conditions between the relevant parties.

  56. The plaintiff recovered damages from the defendant for an admitted breach of the implied terms under both ss. 14(1) and (2) of the 1893 Act, as it then stood. The defendant who produced the feed, in turn, sought an indemnity and damages for breach of contract from the third parties who had supplied the groundnut ingredient, alleging breaches of the same implied terms. The defendant succeeded at first instance and on appeal. In the appeal, the House of Lords held that there was a breach of the implied condition as to fitness for purpose, but it was held by a majority (Lord Pearce dissenting and Lord Wilberforce expressing no opinion) that as the judge had properly directed himself on the meaning of merchantable quality, and on his findings the ground nut extraction was not of unmerchantable quality, there was no breach of the term implied by s. 14(2) of the 1893 Act.

  57. The aspect of the case dealing with merchantable quality turned on evidence that ground nut extractions were sold for inclusion in feed stuffs to cattle even when contamination of this nature was detected. On these findings, Lord Reid set out the general principle of sales by description (p. 75):

  58. .... [I]t is a condition (unless excluded by the contract) that the goods must be of merchantable quality. Merchantable can only mean commercially saleable. If the description is a familiar one it may be that in practice only one quality of goods answers that description – then that quality and only that quality is merchantable quality. Where it may be that various qualities of goods are commonly sold under that description – then it is not disputed that the lowest quality commonly so sold is what is meant by merchantable quality: it is commercially saleable under that description.

  59. On the basis of what Lord Reid described as the somewhat surprising finding that some buyers were ready to buy such ground nut extraction under that description and to pay the ordinary market price for it, the contaminated ground nut extractions were merchantable under the general description of ground nut extractions. At p. 77 of the report, he stated the principle:

  60. .... [I]f the description was so general that goods sold under it are normally used for several purposes, then goods are merchantable under that description if they are fit for any one of these purposes: if the buyer wanted the goods for one of those several purposes for which the goods delivered did not happen to be suitable, though they were suitable for other purposes for which goods bought under that description are normally bought, then he cannot complain. He ought either to have taken the necessary steps to bring subsection (1) [the warranty of fitness for a particular purpose] into operation or to have insisted that a more specific description must be inserted in the contract.

    Lord Pearce dissented on this point and Lord Wilberforce expressed no opinion.

  61. In 1973, the law in the UK underwent a significant change. Section 3 of the Supply of Goods (Implied Terms) Act 1973 (“the 1973 Act”) amended s. 14 of the 1893 Act as follows:

  62. (1)

    Except as provided by this section, and section 15 of this Act and subject to the provisions of any other enactment, there is no implied condition or warranty as to the quality or fitness for any particular purpose of goods supplied under a contract or sale.

    (2)

    Where the seller sells goods in the course of a business, there is an implied condition that the goods supplied under the contract are of merchantable quality, except that there is no such condition: –

    (a)

    as regards defects specifically drawn to the buyer's attention before the contract is made; or

    (b)

    if the buyer examines the goods before the contract is made, as regards defects which that examination ought to reveal.

    (3)

    Where the seller sells goods in the course of a business and the buyer, expressly or by implication, makes known to the seller any particular purpose for which the goods are being bought, there is an implied condition that the goods supplied under the contract are reasonably fit for that purpose, whether or not that is a purpose for which such goods are commonly supplied, except where the circumstances show that the buyer does not rely, or that it is unreasonable for him to rely, on the seller's skill or judgment.

  63. Furthermore, the interpretation provision of the 1973 Act (s. 7(2)) amended s. 62(1) of the 1893 Act to include a statutory definition of merchantable quality as follows:

  64. (1A)

    Goods of any kind are of merchantable quality within the meaning of this Act if they are as fit for the purpose or purposes for which goods of that kind are commonly bought as it is reasonable to expect having regard to any description applied to them, the price (if relevant) and all the other relevant circumstances; and any reference in this Act to unmerchantable goods shall be construed accordingly.

  65. It will be noted that the 1973 Act contains terms very similar to the provisions introduced into Irish law by the 1980 Act. There are a number of significant distinctions between the provisions introduced by the 1973 Act in the UK and the 1980 Act in Ireland, and their common 1893 predecessor. First, the warranty of merchantable quality is no longer limited to sales by description. The warranty now applies to any sale in the course of business. Second, the statutory definition of merchantable quality makes it clear that there is an overlap between the warranty of merchantable quality and that of fitness for purpose since it defines merchantable quality in part by reference to the question whether the goods are “as fit for the purpose or purposes for which goods of that kind are commonly bought”. Third, that definition makes specific reference to price which, it will be recalled, was referred to by Dixon J. in Australian Knitting Mills Ltd v Grant. Fourth, and significantly for the present purposes, the definition refers to fitness for the “purpose or purposes” for which the goods of that kind are commonly bought. The 1973 UK Act also made a number of other important changes, not least the introduction of the concept of consumer sales from which it was not permissible to exclude the terms implied’ which were later adopted in the Irish legislation.

  66. To complete the development of the statutory provisions, it is necessary to observe that the Sale of Goods Act 1979 (“the 1979 Act”) in the UK reorganised the terms of s. 14, making some minor amendments, and bringing the definition of merchantable quality into s. 14 at subs. (6). It is to this Act that the later UK cases refer, although of course the main substantive changes were made in the UK in the 1973 Act. In 1980, the Oireachtas updated the 1893 Act in Irish law so that the statute law in Ireland was broadly similar to that in the UK at that time, as seen above. More specifically, the definition of merchantable quality was brought within s. 14 and placed at subs. (3), and the concept of durability was included in the definition of merchantability. However, nothing turns on that term in these proceedings. Thus, when seeking to understand the argument made on the basis of the decision in Aswan, an important starting point is that the statutory provisions in issue in these proceedings are essentially identical to those contained in the 1979 Act which was the applicable law in the UK at that time.

  67. Section 1 of the Sale of Goods and Supply Act 1994 (“the 1994 Act”) in the UK effected a further significant change in replacing the concept of merchantable quality with an implied warranty of “satisfactory quality” which itself was defined as meeting a standard “that a reasonable person would regard as satisfactory, taking account of any description of the goods, the price (if relevant) and all the other relevant circumstances”. That Act also took the opportunity of amending s. 14 of the 1979 Act to include the concept of durability in the definition of satisfactory quality, but for present purposes it is also significant because it expressly defined the quality of goods as including “fitness for all the purposes for which goods of the kind in question are commonly supplied” (s. 1(2B)(a)). Finally, the Report of the Sales Law Review Group in 2011 on legislation governing the supply of goods and the supply of services, recommended the introduction of a concept of satisfactory quality in place of the warranty of merchantable quality (p. 17). From this recital, it can be concluded that insomuch as this case involves an interpretation of the statutory definition of merchantability in the 1980 Act, the terms in which that definition is couched are effectively identical to the statutory definition of merchantability in the law of the UK between 1973 and 1994. Thus, any decision of the UK courts from that period which considers the statutory definition may be of assistance when considering the Irish legislation.

  68. The facts of the Aswan case were quite extreme. The plaintiff, a construction company conducting business in Kuwait, bought from the first defendant (Lupdine) a consignment of waterproofing compound in plastic pails for shipment to Kuwait. The pails had been supplied to the defendant in turn by the second defendant, Thurgar Bolle Ltd. Before the hearing, Lupdine went into liquidation and the issue became the liability, if any, of the second named defendant either in tort to the plaintiff or in contract to the first defendant. One of the issues which arose was the extent to which it could be said that the plastic pails failed the implied condition of merchantable quality, and whether the implied condition as to fitness for purpose arose.

  69. The pails of waterproofing compound were shipped stacked 5-6 pails high in a container. When the container arrived at Kuwait it stood on the quayside in the sunshine. The temperature rose to 70º centigrade (150º Fahrenheit). Unsurprisingly, the pails collapsed and the water-proofing compound was lost. Importantly, the evidence was that the pails, stacked in the configuration in which they were, could still have resisted temperatures up to 52º centigrade (122º Fahrenheit) and would even survive the 70º centigrade heat if they had not have been stacked on top of each other. There was also evidence that the pails had been used for export to other parts of the world without mishap.

  70. The central issue was Lupdine’s claim to be indemnified by Thurgar Bolle and that issue turned principally on the question of whether there had been a breach of the implied term as to merchantability. The claim failed both at first instance and in the Court of Appeal. At first instance, Neil J. found simply that the pails were of merchantable quality, observing that they had very nearly survived the extreme conditions created by intense heat of an enclosed container in the Gulf. The analysis in the Court of Appeal was however much more detailed. It appears to have been argued that the introduction of the word “purpose or purposes”, and in particular, the use of the plural in the 1973 Act (and re-enacted in the 1979 Act) meant that the pails were required to be fit for all the purposes for which they were sold. It was thus argued that, since they failed in Kuwait, they were not fit for at least one of the purposes for which they were sold and were not merchantable. On behalf of the supplier of the pail, Thurgar Bolle, it was argued that the statutory definition then contained in s. 14(6) of the 1979 Act made little if any change to the existing law, and the fact that the pails were manifestly generally fit for the purposes for which they were sold meant that they were of merchantable quality.

  71. Lloyd L.J. conducted a careful and impressive analysis of the law of merchantability prior to the enactment of the 1973 Act. He concluded that the definition of merchantability did not alter the law as laid down in Henry Kendall & Sons v William Lillico & Sons Ltd (also reported as Hardwick Game Farm v Suffolk Agricultural Poultry Producers Association) [1969] 2 A.C. 31 (“Hardwick Game Farm”)). While accepting that the contrary argument was attractive, he concluded that the true position was that the statutory enactment of the definition of merchantability was as accurate a reproduction of the test advanced by Lord Reid in the Hardwick Game Farm case as it was possible to compress in to a single sentence. It was however necessary to explain why the plural “purposes” had been used in the statute. Lloyd L.J. took the view that this could be traced to the fact that, as pointed out in the Hardwick Game Farm case, goods of any one kind may be sold under more than one description corresponding to different qualities. He explained the significance he attributed to this in the following important passage (p. 13):

  72. To take the facts of the present case, heavy duty pails are no doubt higher quality than ordinary pails, and for that reason no doubt command a higher price. Pails which are suitable for the lower quality purpose may not be suitable for the higher quality purpose. It would obviously be wrong that pails sold under a description appropriate to the higher quality should be held to be merchantable because they are fit for a purpose for which pails are sold under the description appropriate to the lower quality. Since the definition presupposes that goods of any one kind may be sold under more than one description, it follows that the definition had, of necessity, to refer to more than one purpose. In my opinion, this is the true and sufficient explanation for the reference to “purposes” in the plural. The reference to the purpose in the singular was required in order to cover one-purpose goods, such as the pants in Grant v Australian Knitting Mills Ltd., 50 C.L.R. 387. It would be wrong to infer from the use of the phrase “purpose or purposes” that Parliament intended any such far-reaching change in the law as that for which Mr. Aikens contends.

  73. The analysis in Aswan was central to the argument made by Irish Asphalt in this case and we were invited to adopt the analysis in Aswan as a correct statement of Irish law. It was argued that Clause 804 was sold for a number of purposes, initially for the purposes of road construction, but also for hard core under floors, as here, and as general hard core for car parks and open areas which were not load-bearing. Those areas had not been remediated by Elliott Construction when it removed the Clause 804 material from the youth facility and replaced it. Accordingly, it could be inferred, it was argued, that the product could be satisfactorily used at least for that purpose. On that basis, it was fit for at least one of the purposes for which it was commonly sold and had indeed been sold for that purpose in this case. On the analysis in Hardwick Game Farm, it was of merchantable quality. Aswan was at least persuasive authority that the changes effected in the UK in 1973, and introduced in Ireland, did not as a matter of law affect the conclusion in the Hardwick Game Farm case, and thus, the Court should hold that the Clause 804 material was of merchantable quality.

  74. It was frankly acknowledged that the subsequent development of the law in the UK and elsewhere, until the amendment of the statutory definition in 1994, was less clear-cut. In Rogers v Parish (Scarborough) Ltd. [1987] Q.B. 933 (“Rogers v Parish”), a differently constituted Court of Appeal had to confront a similar argument in the context of a consumer contract, in that case the purchase of a Range Rover motor vehicle. The plaintiffs purchased a Range Rover which was sold as new but proved to be defective and another Range Rover was substituted for it. On delivery, however, the engine, gear box and bodywork of the replacement were substantially defective, and oil seals at vital junctions were unsound, causing significant quantities of oil to escape. There were a number of unsuccessful attempts made by the garage to rectify the defects. At the end of a six month period, the engine was still misfiring, excessive noise was being emitted from the gear box, substantial defects remained in the body work, and the plaintiffs rejected the vehicle. The plaintiffs then brought an action for a declaration that there had been a breach of the implied condition as to merchantable quality, and that they had been entitled to repudiate the contract. The judge at first instance found that since none of the defects had rendered the vehicle unroadworthy, unstable or unfit, it was reasonably fit for its purpose which was that of driving, and it was accordingly of merchantable quality.

  75. Perhaps unsurprisingly, the decision was overturned on appeal. It is one of the additional difficulties of this line of authority that Aswan was not among the authorities cited to the Court of Appeal, possibly because it had only recently been decided, and may have not have been reported at that time. However, the arguments for the unsuccessful defendant in Rogers v Parish were almost precisely those which had succeeded in Aswan. At p. 937, counsel is recorded as relying on the decision of the House of Lords in the Hardwick Game Farm case for the proposition that the vehicle, being commercially saleable and useable for a secondary purpose, albeit at a lower price than the plaintiffs had paid, was not therefore unmerchantable, and the plaintiffs were entitled to no more than the difference between the price they paid and the value at which the vehicles were commercially saleable. It was also argued that the 1973 Act, while inserting a statutory definition of merchantability, did no more than codify the law as the House of Lords had stated it in Hardwick Game Farm, relying in that regard on the observations of Lord Denning in Cehave N.V. v Bremer Handelsgesellschaft M.B.H. The Hansa Nord [1976] Q.B. 44 at p. 62, a decision also referred to and relied on in Aswan.

  76. The Court of Appeal (Mustill and Woolf L.JJ. and Sir Edward Eveleigh) unanimously rejected this argument. In particular, the court disapproved of the suggestion that the 1973 Act should be interpreted in the light of decisions under the 1893 Act. Mustill L.J. said at pp. 942 – 943:

  77. In the course of argument before us our attention was drawn to various expressions of opinion in cases decided before the enactment of the 1973 legislation as to the precise significance of the term “merchantable quality.” In my judgment this is not a practice to be encouraged. The Act of 1973 was an amending Act and it cannot be assumed that the new definition was included simply because the draftsman saw a convenient opportunity to reproduce in more felicitous and economical terms the gist of the speeches and judgments previously delivered. The language of section 14(6) is clear and free from technicality, and it should be sufficient in the great majority of cases to enable the fact-finding judge to arrive at a decision without exploring the intricacies of the prior law. In my judgment the present case is not one of those exceptional cases where it may be necessary to have recourse to the former decisions in order to give the full meaning to the words of the subsection.

  78. The Court then addressed the argument that since the vehicle was capable of starting and being driven safely from one point to the next on public roads, and whatever other service the car was supposed to be able to negotiate, it must necessarily be merchantable. Mustill L.J. firmly rejected that contention (p. 944):

  79. I can only say that this proposition appears to have no relation to the broad test propounded by section 14(6) [the definition of merchantability] even if, in certain particular circumstances, the correct inference would be that no more could be expected of the goods sold.

  80. He then pointed out that the purpose for which goods of that kind, i.e. a new motor vehicle, were bought included not just travelling from one place to another, but doing so with the appropriate degree of comfort, ease of handling, reliability and indeed pride in the vehicle’s outward and interior appearance. Accordingly, he had no difficulty in concluding that the Range Rover was not as fit for the purposes the buyer could reasonably expect. Woolf L.J. was also of the same opinion as to the inappropriateness of having recourse to authorities which were dealing with the different provisions of s. 14 of the 1893 Act.

  81. As it happens, the Australian Trade Practices Act 1974 also incorporated amendments to the implied terms of merchantability and fitness for purpose, which are essentially similar to those which were introduced by the Act in UK in 1973. In Cavalier Marketing (Australia) Pty Ltd v Rasell (1990) 96 A.L.R. 375 (“Cavalier Marketing”), the Supreme Court of Queensland, which was referred to both decisions and firmly preferred the approach in Rogers v Parish to Aswan. In Cavalier Marketing, the goods supplied were a carpet, which on installation showed evidence of reverse piling which affected its colour and shading. It was argued that the carpet was fit for the purpose of floor covering in terms of physical quality and manufacture, which was the purpose for which a carpet was commonly bought. Thus it was said to be merchantable notwithstanding the reverse piling. One member of the court, Cooper J., addressed the divergence in the authorities and indeed in the academic commentary on the new provisions. Page 400 of his judgment contains three passages which encapsulate his approach to the section:

  82. I am not persuaded that the approach of Lloyd LJ in Aswan Engineering is a correct approach to statutory interpretation. The words of the statute ought to be given their ordinary meaning. The statutory definition so construed is capable of operating without absurdity or ambiguity, no occasion to refer to the previous common law as an aid to construction arises ....

    .... I agree with the observations of Mustill and Woolf LJJ in Rogers. It is unnecessary and undesirable to look to the common law definition of merchantability for the purpose of construing section 66(2) and section 74(g)(1) and (3) of the Act. The common law tests relates to saleability of goods. They are tests of merchants and are more appropriate to commercial sales. The provisions of s.66(2) and s.74(d)(3) are quite different and focus on the reasonable objective expectations of a consumer as defined. They are not concerned with the goods purchased for resale, although indirectly a consumer may purchase goods with the ultimate view of resale e.g. a family motor vehicle. Further the legislation ought to be interpreted against the background of its remedial character giving consumers rights and protection which previously were not available. The definitions in s.66(2) and s.74(d)(3) are comprehensible and flexible and ought to be directly applied, in accordance with their terms, to the many and varied facts and situations which they may apply ....

    Goods may have more than one normal purpose .... In my view as a matter of construction and as a matter of legislative intent, the section requires that all normal purposes for which goods are commonly bought be brought into consideration. Fitness is tested against each of these purposes and none are to be excluded. The decision is otherwise if the terms of the contract as supplied between the direct supplier to the consumer (including any description applied to the goods by that supplier) or alternatively any description applied by the corporation (i.e. manufacturer/importer/distributor) the goods requires that a particular normal purpose be excluded. Such a construction is reasonable in both the interests of the consumer and the corporation. First, it addresses and responds to the reasonable expectations of the consumer at the time of acquisition of goods that they will be fit for all their normal purposes, subject to the terms of the contract of supply to which the consumer has agreed. Secondly it addresses the reasonable expectations of the corporation as to the purpose or purposes to which the goods will be put. Thus the corporation may by the description, if any, it attaches to the goods, the price it receives and any other relevant circumstances place goods in circulation in such a manner that the corporation may delineate the relevant purpose or purposes itself ....

  83. The final case in the sequence is Rotherham Metropolitan Borough Council v Frank Haslam Milan & Co. Ltd [1996] C.L.C. 1378 (“Rotherham”). Although decided in 1996, the case concerned works done between March and July 1979. Therefore, it was decided by reference to the provisions of the 1979 Act. The facts of the case bear a superficial resemblance to the facts of the present case.

  84. The defendant contractor was employed by the plaintiff Borough Council as contractor for the erection of a new five storey office building to be used as civic offices. Phase one involved site preparations and foundation work. The bill of quantities referred to granular hard core which was to be graded or uncrushed gravel stone or rock, filled crushed concrete, or slag. It was accepted that the granular fill material supplied included steel slag, and that in fact such steel slag, in confined conditions, was subject to expansion, and did expand so as to cause cracking to the reinforced concrete slabs and damage to the building.

  85. The claim in the Rotherham case was by the client against the builder. In other words, it was the equivalent of a claim made by Ballymun against the Elliott Construction in these proceedings. As such, it was not a claim for sale of defective goods, but rather provision of services alleged to be defective by the supply of the product. It was however, accepted that the same principle supplied in such a case as in a claim for breach of the terms implied on a sale of goods. The plaintiff Borough Council succeeded at first instance in establishing both a breach of the implied term as to fitness for purpose and the merchantability. In the Court of Appeal, the decision was reversed. The principal focus of the case was the implied term of fitness for purpose. The Court accepted that the specific purpose for which the product was used was made known to the contractor since the specifications made it clear that it would be used in a confined space as foundation material. However, the Court concluded that the circumstances showed that the plaintiff had not relied on the contractor’s skill and judgment, principally because the material was specified by the plaintiff’s architect. The case was treated as one in which the question to be resolved was who should bear the risk of the damage to the building caused by the fill used around the foundations, the professional persons who specified the material or the contractors who supplied it? The Court appears to have been influenced by the fact that there was some developing knowledge about the capacity of steel slag to expand, and that the architects and engineers specifying it were in a better position to know that than contractor who bought material for suppliers to fill a contractual specification. In the circumstances of the case, the Court held that the plaintiff had not relied on the skill and care of the contractor. It will be necessary to return to this analysis when considering the claim under s. 14(4).

  86. However the decision also dealt with the claim that there was a breach of the implied term as to merchantability which it was accepted formed part of the contract between the plaintiff Borough Council and the defendant contractor. That was dealt with as subsidiary to the main argument on fitness for purpose and appears to have been influenced by the conclusion to which the Court came on that point. Unfortunately, although the Court was referred to the Hardwick Game Farm case and Aswan, there was no reference to Rogers v Parish or to Cavalier Marketing.

  87. The central factual feature of this case was the agreement between the experts that, “‘[s]teel slag is currently being used in a number of applications in the construction industry. The material is saleable and can be used in appropriate unconfined applications and in bituminous macadam.’” (p. 1389). Indeed, it was observed that it was used for those very purposes on the contract. The Court accordingly concluded that it was commercially saleable, and, therefore, of merchantable quality. The Court adopted the analysis of Lloyd L.J. in Aswan as to the coincidence between the pre-1973 law and the statutory definition contained in the 1973 Act.

  88. Irish Asphalt has understandably placed heavy reliance on the decision in Rotherham, not least because of its factual similarity to the present case. While acknowledging the different strand of judicial opinion illustrated by Rogers v Parish and Cavalier Marketing, it was nevertheless submitted that the analysis proffered by Lloyd L.J. in Aswan was the correct one in relation to the statutory definition of merchantability contained in the 1973 Act as reproduced almost identically in the 1980 Act.

  89. There are good reasons why an Irish court should analyse with particular care decisions in other common law jurisdictions in respect of the provisions of the 1893 Act and its statutory successors. First, where the provisions are identical, the analysis of another court will often be helpful. Second, all other things being equal, it is normally desirable that significant differences of interpretation of the same provisions between courts in different jurisdictions should be avoided. Particularly in the field of international commercial transactions, there is a significant benefit in the same well understood code applying in different jurisdictions. Where, outside the field of consumer contracts, the parties can negotiate their own terms, all that such parties require is knowledge of the default position. In the light of that knowledge, they can decide whether they wish that position to be adjusted in the contract between them. In such circumstances, certainty is often more important than the most intellectually satisfying analysis. Furthermore, where an interpretation of the statutory provision has been settled on in one jurisdiction, and another jurisdiction subsequently adopts the same statutory language, it may be permissible, subject to the strictures contained in Inspector of Taxes v Kiernan [1981] I.R. 117, to deduce that the legislature has adopted that language in the knowledge of the interpretation applied to it. In certain circumstances, the fact that a court in one jurisdiction offered an authoritative interpretation of a statutory provision might itself be a powerful argument in favour of the adoption of that same interpretation of what might otherwise appear to be an ambiguous statutory provision.

  90. However, these factors have little weight in this case. First, Aswan post-dated the provisions of the 1980 Act. Second, neither Aswan nor Rotherham can be regarded as entirely authoritative even in terms of the jurisprudence of the UK because of the existence of the decision in Rogers v Parish, and the fact that Rotherham was decided without reference to that case. Perhaps even more importantly, the decision in Cavalier Marketing shows that the Aswan interpretation has not been accepted in another common law jurisdiction. Finally, and in any event, the fact that the statutory definitions have now diverged since 1994 removes the possibility of cross-jurisdictional uniformity of interpretation. Accordingly, it is necessary to address this case on its merits.

  91. It is no discourtesy to the lucid submissions of counsel for Irish Asphalt to say that we have come to the clear conclusion that its arguments cannot be accepted. Indeed, the clarity of the argument has greatly facilitated the Court’s analysis. Nevertheless the Court has come to the conclusion that there was in this case a breach of the implied term as to merchantable quality.

  92. At a fundamental level, the Court considers that the evidence does not provide a sufficient basis in fact to allow an argument based on Aswan to be advanced. It should be said that, notwithstanding the amount of judicial and academic ink spilt over the issue, the problem identified in cases such as the Hardwick Game Farm and Aswan is not a common place one. It requires evidence of something which must normally be unusual, or in the words of Lord Reid, surprising. It is a necessary precondition of the legal argument that it be established as a matter of fact that, although a product contains an element rendering it defective for one purpose for which it is commonly bought or sold, it can nevertheless be sold and used for another purpose for which it is commonly sold, and then at a price at least equivalent to the price paid for the product which proved defective for the purpose for which it was bought. Furthermore, adopting the approach of Dixon J. at first instance in the Australian Knitting Mills Ltd v Grant case, it would be necessary to show that a buyer with knowledge of the defect or characteristic, would nevertheless purchase it, at a roughly equivalent price. It is understandable that such evidence would, in the normal case, be surprising. The reference to price in the statutory formula is important. Where a product has a number of possible uses, the fact that a product has more than one application or use, by increasing demand, will normally have an impact upon price. If it transpires that a product can only be safely used for one of its possible purposes, it is normally to be expected that that will depress the price in a functioning market. It is not readily to be assumed that a purchaser with knowledge of the characteristic of the product would nevertheless purchase it for another purpose at the same or similar price. In the Hardwick Game Farm case, such evidence, albeit surprising, was available. Similarly, in the Rotherham case, the agreed evidence of the experts was taken as establishing that fact. But that is evidence which requires to be given and tested, and should not be readily assumed.

  93. In this case, in the Court’s view, the evidence falls far short of what is required to establish a sound basis for the Aswan argument. It is important that evidence was not directed towards this point. Instead, the argument was based on a careful analysis of the evidence in general, from which it was said it was possible to deduce that Clause 804 had been used uniformly as hardcore throughout the site, both in respect of load bearing areas under the building and outside the footprint of the building. It was established that the remediation work had removed Clause 804 used under the building, and some, but not all, of that used outside the footprint of the building. From this, it was said it should be deduced that the Clause 804 not removed was satisfactory, and, accordingly, it was argued that this should be accepted as evidence that the product was fit for one purpose and, therefore, applying the Aswan analysis, was of merchantable quality. Notably, although Clause 804 was initially identified as hardcore for use in road building, it was not suggested, either in argument or evidence, that Clause 804 containing pyrite was suitable for this purpose.

  94. The Court is satisfied that this falls decisively short of the level of evidence which it would be necessary to establish to allow the Aswan argument to be made. The evidence that Clause 804 was not removed from car park areas does not demonstrate that a purchaser with knowledge of the defect would nevertheless pay a similar price for such material for use even under a car park and in open space areas. The absence of such evidence is particularly telling in this case. The defendant, as owner of a quarry with substantial quantities of stone affected by framboidal pyrite, would be in a strong position to provide evidence of sales of the product, if such evidence were available.

  95. Since, however, the High Court addressed the substance of this issue, and since questions of the interpretation of s. 14 of the 1893 Act (as amended) rarely reach this Court, it is desirable to address the substantive legal issue. On the assumption, therefore, that it was demonstrated that there was a use for which the Clause 804 was saleable to a purchaser aware of the pyrite content and its propensity to swell and heave, then we are of the view that that fact alone would not be sufficient to render the product supplied to the respondent merchantable within the meaning of s. 14 as substituted.

  96. First, the Aswan decision is complicated by the fact that the result seems plainly correct. The pails were very robust and almost withstood extraordinary heat to which they were subjected, and would indeed have withstood even that heat if not packed on top of each other in a manner which increased the pressure on the pails. But we doubt, with respect, that it could properly be said that there were two separate purposes involved here, or indeed, that the purpose of the storage of waterproofing compound in Kuwait could be said to be a separate and distinct purpose from that for which for which the pails were commonly sold. It seems more natural to consider that the purpose for which the pails were sold, whatever the location, was a single one: the storage of waterproofing compound or perhaps more generally, other bulk liquids for transport and storage. That was the purpose for which the pails were commonly used and sold, and taken as a whole, the pails were as fit for that purpose as it was reasonable to expect. This was indeed, it appears, the basis upon which the judge at first instance had rejected the plaintiff’s claim. We consider that this is a more plausible and practical approach to this case. Indeed, the fact that it is possible to characterise the same product as either having different purposes or a single purpose expressed at a more general level of abstraction, suggests that there are significant limits to the applicability and utility of this line of argument.

  97. Second, we consider in any event that the approach to statutory interpretation in Roger v Parish and Cavalier Marketing, is preferable to that in Aswan. The normal purpose of statutory amendment is to change the existing law. It may on occasion be useful to address the prior law if only to illustrate the area of change, but it would be unusual to approach a statutory provision on the basis that it did no more than restate the existing law. Indeed, if the definition of merchantable quality was intended to simply express in a slightly more compressed form what had already been said by Lord Reid in the Hardwick Game Farm case, it is difficult to see what would be achieved by attempting to put in statutory form what had already been laid down by the highest court in that jurisdiction.

  98. Third, the purpose of the 1973 Act and the 1980 Act was to effect significant changes in the law generally, and in particular to shift the balance of the law somewhat in favour of the purchaser, and indeed to establish the concept of consumer sales in which it would not be possible to exclude the implied terms. It might be said that the changes to the concept of merchantability were quite marginal, but these cases, as the difference of judicial opinion shows, were at the margins, and it is not inconceivable that small changes of definition might alter the outcome of such cases.

  99. Fourth, taken on its face, the terms of s. 14(3) are clear, easy to apply, and by no means absurd. There is no reason to advance or accept a more sophisticated meaning. The words “purpose or purposes” when applied in their ordinary sense are both capable of application and produce a sensible result. On the other hand, it is, and with respect, not easy to interpret the words as expressing Lord Reid’s definition in a more compressed form. It is necessary to hypothesise the purpose for which goods are most “commonly bought” for which they are nevertheless, unfit. If this is indeed the case, it is difficult to see why there should be any reluctance to find such goods to be not of merchantable quality. The emphasis on description, while understandable in the context of the 1893 Act where the applied term as to merchantability only arose on sales of description, is less appropriate in the context of the modern legislation

  100. Furthermore, the example proffered in Aswan of the circumstance of sale of the same goods by different descriptions, and, therefore, justifying their reference in the plural to “purposes” is not, in our view, persuasive. It was said that heavy duty pails were of higher quality than ordinary pails and for that reason might command a higher price. Pails which are suitable for the lower quality purpose may not be suitable for the higher quality purpose. It would however be obviously wrong that pails sold under the description appropriate to the higher quality should be held to be merchantable because they are fit for a purpose for which pails are sold under the description appropriate to the lower quality. In such a circumstance, it would seem more natural to conclude by reference to the statutory definition, that the more expensive heavy duty pails were not of merchantable quality because they were not fit for the purpose (singular) for which they were sold, having regard to the description applied to them and the price. In any event, this complex interpretation seems an unlikely one to ascribe to a drafter who has used plain and simple language.

  101. Finally, and from a broader perspective, it was argued that the interpretation adopted in Rogers v Parish and Cavalier Marketing, and in the High Court in this case, shifts the dividing line between the merchantability term and the fitness for purpose term, to the point where the fitness for purpose term is virtually obliterated. However, the history of the development of the formulation and interpretation of the terms traced so carefully in Aswan and elsewhere, is of the gradual elevation of the merchantability term, which means, almost inevitably, that the fitness for purpose term has less work to do. This, in itself, is not a reason to reject the interpretation of the High Court. Furthermore, it is perhaps inaccurate to speak of a ‘dividing line’ between the terms. Both terms now address fitness for purpose, and there is an unavoidable, and intended, overlap between them. Indeed, the fitness for purpose term is capable of covering all the ground dealt with by the merchantability term and more. While the fitness for purpose term applies most naturally in the area of special or unusual purposes, it is in principle capable of applying to any purchase. For example, even if the implied term as to merchantability arises, if the purchaser makes known to the seller the purpose for which the goods are bought, then, even if that is the sole purpose for which such goods may be sought, the purchaser can succeed under the implied term as to fitness for purpose as well as the implied term as to merchantability. It is thus perhaps more accurate to say that the end result of the interpretation adopted in the High Court is that the area which is covered for the fitness for purpose term alone, is reduced to special or uncommon purposes but we see no reason why that should lead to a different interpretation of the term ‘merchantable’. A narrow reading of the merchantability term is often justified by the argument that, if the purchaser wishes greater protection, he or she can always invoke the fitness for purpose term by making known the purpose for which the product is sought, and relying on the seller’s skill. This is so, but is hardly a compelling reason to adopt a narrower interpretation. There also must be limits to this type of argument since it assumes, touchingly but unrealistically, that parties negotiating sales are avid consumers of the decisions on the Sale of Goods Act and its various amendments. But even if this approach is taken, it still seems more sensible to adopt the Rogers v Parish approach. A seller may be more knowledgeable about the purposes to which the product is put than the purchaser. A purchaser may not know that there are multiple uses for the product. He or she may consider that the use for which they are buying the product is the obvious and only use for the product. But, on the Aswan reasoning, the product, though unfit for that purpose (being perhaps the overwhelmingly obvious purpose for the product), can nevertheless be merchantable, if it is suitable for some purpose of which the buyer may be entirely unaware. In such circumstances, the purchaser may not even know of these matters, or their legal consequences, and thus may be unaware of the importance, and indeed necessity, of seeking to bring into play the warranty of fitness for the particular purpose for which he or she has brought the product.

  102. Finally, at the level of principle, an interpretation of the provision which imposes the risk (at least initially) upon the seller rather than the purchaser, is sensible and logical. Sellers are normally much more aware of the use to which their products can be put than individual buyers. Increased use will increase demand, and, therefore, the price for the goods, even when used for the original purpose. It is perhaps noteworthy that one of the innovations in the 1980 provisions is the reference to the price at which the product was sold being a component of merchantability. For these reasons, we have come to the conclusion that Irish Asphalt’s contention must fail, and that the High Court was right to hold that the Clause 804 as applied here was not of merchantable quality.

  103. Fitness for Purpose

  104. The trial judge also found that Irish Asphalt was in breach of the condition implied pursuant to s. 14(4) of the 1893 (as substituted by s. 10 of the 1980 Act). It may be helpful to set that section out in full:

  105. Where the seller sells goods in the course of a business and the buyer, expressly or by implication, makes known to the seller any particular purpose for which the goods are being bought, there is an implied condition that the goods supplied under the contract are reasonably fit for that purpose, whether or not that is a purpose for which such goods are commonly supplied, except where the circumstances show that the buyer does not rely, or that it is unreasonable for him to rely, on the seller’s skill or judgment.

  106. It is of course apparent that this is closely related to the implied condition as to merchantable quality, since both address both the question of fitness for purpose, and the purpose for which goods are commonly bought or supplied. As already observed, there is on any interpretation, a significant degree of overlap between the two provisions. It is however important to distinguish between them. There are some distinct features of s. 14(4). First, whereas the condition as to merchantable quality arises once there is a sale of goods in the course of business, the term implied under s. 14(4) does not arise until the buyer does something. He or she must expressly or by implication make known to the seller any particular purpose for which the goods are being bought. A second distinctive feature of s. 14(4) is the concept of reliance. The section presumes reliance on the seller’s skill and judgment. This is shown by the fact that the implied condition does not arise if reliance is negatived in fact, or if reliance would be unreasonable. By contrast, the implied condition under s. 14(2) arises whether or not there is reliance, and is not negatived by proof of its absence. Finally, the question of the seller’s skill and judgment only arises in the context of s. 14(4). Again by contrast, the condition of merchantability under s. 14(2) arises on sale, and cannot be negatived by proof that the seller has used the utmost skill and judgment to ensure that the product is of merchantable quality. That is also the case under s. 14(4), but the reference to skill and judgment suggests perhaps, that the implied condition would normally be thought to arise in circumstances where the question is the selection and appropriateness of goods for the particular task rather than the inherent, and perhaps latent, defect in the goods. The implied condition is broad enough to cover the latter situation but it is not perhaps its primary focus.

  107. The evidence and decision in this matter are contained in paras. 246 and 247 of the judgment of the High Court. The relevant evidence was the cross-examination of Patrick Elliott, the principal of the plaintiff firm, Elliott Construction. Mr Elliott accepted that he did not supply any copies of the Ballymun Regeneration contract to Irish Asphalt from which it follows, none of the drawings would have been supplied to that company. This is to be expected. Elliott Construction merely ordered from a supplier, in this case Irish Asphalt, a product which had been specified by the professional advisers to Ballymun. Mr Elliott agreed that he did not ask anyone from Irish Asphalt to come and look at the site, but pointed out that that firm visited the site regularly with their deliveries. Elliott Construction did not tell Irish Asphalt specifically that it was going to use the Clause 804 under the building. Mr Elliott considered however that that was implied because “why else would we have been buying the Clause 804 off them, it’s a structural infill material ....” He said:

  108. They [Irish Asphalt] knew we were a general building contractor and not engaged in civil engineering and road building works and works of that nature. They knew that we were primarily into, you know, building factories and buildings like the Youth Centre and such around Dublin ....

    The trial judge accepted the evidence of Mr Elliott who he considered to be honest. He concluded that the material was not reasonably fit for a purpose which had been made known to the seller.

  109. It is clear that this was a subsidiary issue in the trial. Furthermore, in circumstances where this Court has upheld the finding of a breach of the condition as to merchantability, it becomes less important to determine whether or not there was a breach of s. 14(4). However, in view of the conclusion of the High Court Judge, the view we have taken of it, and the importance of clarity in this area, it is necessary to consider the matter.

  110. While s. 14(4) might apply most classically in the case of a purchaser asking a vendor’s advice as to whether a particular product is suitable for some particular purpose, it is not necessary that anything so formal or pedantic should take place. In many cases, it would be apparent that the particular purpose has been made known by implication, and it is the circumstances, rather than any express evidence, which may show that the buyer does, or does not, rely on the seller’s skill and judgment. Furthermore, while there are a number of different components to the section, it is important to keep in mind that it is a single provision, and that, in most cases, the relevant evidence will be short, and will satisfy all the components of the section, both positive and negative.

  111. One distinctive feature of the section, and in contra distinction to s. 14(2), is that, as already observed, it is triggered by the purchaser doing something. This is of some importance because it is the making known of the purpose which gives rise to the circumstances which may demonstrate that the buyer does not rely, or that it is unreasonable to rely, on the seller’s skill and judgment. Therefore, it is not enough that the evidence shows that the seller knows the purpose for which the product is used. There must, at some basic and even rudimentary level, be some circumstances from which it is fair to say that the buyer made that purpose known to the seller. In our view, the evidence goes so far as to demonstrate that the seller probably knew that one of the purposes for which the Clause 804 was ordered by Elliott Construction was to be used under the building at foundation level, but there is no evidence from which it can be said that it was made known to the seller by the buyer as envisaged by s. 14(4). By the same token, and in this respect, applying similar analysis to that in the Rotherham case, we conclude that the circumstances in this regard show that Elliott Construction did not rely on Irish Asphalt’s skill or judgment. Elliott Construction did not itself exercise any thought as to the appropriateness of this Clause 804 for the contract. It was specified, by the employer, on the advice of its professional advisors, and Elliott Construction was required to obtain it. There was no room in that transaction for reliance by Elliott Construction on Irish Asphalt’s knowledge, skill or judgment, as if Elliott Construction relied on anyone’s skill or judgment, it was by implication that of the persons specifying the Clause 804 for this purpose, although it might be more realistic to say that, in that regard, Elliott Construction was simply complying with its contractual obligations. Accordingly, we conclude that no implied condition arose under s. 14(4) of the 1893 Act, as substituted by s. 10 of the 1980 Act. Since, however, we have also concluded that there was a breach of the implied condition as to merchantability, this conclusion on s. 14(4) does not affect the outcome of the case.

  112. Incorporation of Terms and Conditions

  113. The next issue that arises for consideration is the question as to whether or not Irish Asphalt’s terms and conditions of sale were incorporated into the contract or contracts between it and Elliott Construction. This issue was considered by the learned trial judge at paras. 248 to 257 of his judgment under the heading “Notice”. The trial judge rejected the argument that the terms and conditions of sale were notified by Irish Asphalt to Elliott Construction. The learned trial judge came to the conclusion that the same were not so notified, and Irish Asphalt has appealed from the findings of the trial judge in that regard.

  114. Irish Asphalt sought to rely on the terms and conditions by reason of the provisions of Clause 8 thereof which have the effect of limiting its liability in the event of goods being defective. Clause 8 is in the following terms:

  115. In the event of goods being delivered which are defective, the company’s liability shall be limited to the cost of their replacement. In no circumstances shall the company be liable for any of their loss arising directing or indirectly from the supply of defective materials.

    There may be some debate as to the precise meaning of the phrase “the cost of their replacement” in Clause 8, but there is no doubt that the effect of the clause sought to be relied on by Irish Asphalt is to significantly limit its liability to a party to whom it has supplied goods arising out of any defect in those goods. It is also helpful to refer to a clause which appeared on delivery dockets furnished by Irish Asphalt, which contain the following words:

    This material is sold subject to the terms and conditions available on request. White to accounts – pink to customer – blue to haulier – yellow to file.

  116. The Court was referred to a considerable number of academic works and to a large volume of case law on the subject of incorporation of terms and conditions, particularly those containing exemption clauses, in the course of the hearing. The observation contained in Clark, Contract Law in Ireland (Dublin; Round Hall; 2013; 7th ed.) at p. 221 seems apposite:

  117. The Irish judges, like their English brethren, have struggled with the problem of incorporation because the tests advanced have varied from time to time.

  118. Terms and conditions can be incorporated into a contract in a number of ways . Irish Asphalt has relied on the following in arguing that the terms and conditions were incorporated into the contract:

    1. Incorporation by signature;

    2. Actual notice of the terms and conditions by reference to three credit notes;

    3. Reasonable notice by reference to delivery dockets both during the course of the Ballymun Regeneration Project and in the course of earlier projects;

    4. Incorporation by means of a course of dealing;

    5. Incorporation by reference.

  119. Contractual Documents

  120. An important part of Irish Asphalt’s argument on the issue of incorporation concerned the status of the delivery dockets, and how they should be viewed in the context of the contracts as a whole. It was submitted on behalf of Irish Asphalt that each individual delivery was a separate contract. Counsel for Irish Asphalt submitted that the delivery dockets were contractual documents, and that the signing of those dockets by Mr Hannay, the site foreman of Elliott Construction, created, or alternatively, evidenced, the contracts. Thus, counsel submitted that on each occasion, an individual contract for the sale of Clause 804 took place, and that the contract must have included the terms and conditions relied on because of the proviso as to terms and conditions contained in the delivery dockets signed by Mr Hannay.

  121. The delivery dockets were described as contractual documents by Elliott Construction in its replies to particulars, wherein it was stated: “The contractual documentation consists of delivery dockets and invoices”. The characterisation of the delivery dockets in the replies to particulars as contractual documents does not of itself answer the question as to whether or not the delivery dockets are contractual documents, or, more importantly, whether the terms and conditions of Irish Asphalt were incorporated into the contract either by signature or by reference.

  122. Counsel on behalf of Elliott Construction, contended that, insofar as the terms of the contract were concerned, they were negotiated prior to the involvement of Mr Hannay. While it was accepted that there were individual contracts created on each occasion that the foreman on site ordered a specific load, the foreman did not have any involvement in the negotiation of price, or in relation to the acceptance or otherwise of any terms and conditions. The pre-existing terms as to price were those agreed between the principals of the respective parties. In his submissions, counsel for Elliott Construction made reference to the High Court decision (Finlay Geoghegan J.) in the case of Noreside Construction Limited v Irish Asphalt [2011] IEHC 364 (“Noreside”) which is under appeal to this Court. While not relying on the judgment in that case on the subject of contractual documents by way of precedent, counsel for Elliott Construction relied on the analysis contained in that judgment as to the role of the delivery dockets:

  123. In my judgment on the facts herein, the delivery dockets had a contractual purpose in the sense of being a document used in the execution of the contract which came into existence on 26th March, 2003. They did not have contractual effect in the sense of making or varying a contract. Having regard to the system operated by both parties for the performance of the supply contract agreed on 26th March, 2003, neither a reasonable man nor any haulier or site operative signing a delivery docket on behalf of the plaintiff would have understood that his signing of the delivery docket potentially varied the terms of the contract already agreed according to which the aggregate was being supplied by the defendant to the plaintiff.” (para. 38)

  124. Counsel for Elliott Construction pointed out that the delivery notes were for the most part signed by Mr Hannay who was the site foreman, but were not always signed by someone at his level. It was also stated that Mr Hannay had no authorisation to do anything in relation to the delivery notes, other than to confirm the amount shown on the delivery docket was the amount that was in fact delivered, thus confirming that Elliott Construction had received that amount of product.

  125. The Court is of the view that there was an overarching contract between the parties or a “master contract” for the supply of goods for the Ballymun project which identified, inter alia, the goods required, the price for the goods, and the credit terms applicable to the sale of those goods. After that, a series of separate contracts were made for the sale and supply of Clause 804 during the course of the Ballymun Regeneration Project. It is in that context that the Court will consider the nature of the delivery dockets.

  126. Counsel for Irish Asphalt relied on a number of authorities in support of its arguments including the decision in the case of Spurling Limited v Bradshaw [1956] 1 W.L.R. 461 (“Spurling”) in which the United Kingdom Court of Appeal considered the status of a “landing account”. The defendant in that case had dealings with the plaintiff warehousemen, and delivered to them a number of barrels of orange juice for storage. A few days later, the defendant received a “landing account” which, on its face, referred to conditions printed in small type on the back. Those conditions included an exemption clause. The barrels, when collected, were found to be empty, or in such damaged condition as to be useless. The warehousemen sued for charges due for storage and the defendant counterclaimed for damages for breach of an implied term of the contract of bailment to take reasonable care of the barrels. Denning L.J. (at p. 467) commented:

  127. It is to be noticed that the landing account on its face told Mr. Bradshaw that the goods would be insured if he gave instructions; otherwise they were not insured. The invoice, on its face, told him they were warehoused ‘at owner's risk’. The printed conditions, when read subject to the proviso which I have mentioned, added little or nothing to those explicit statements taken together.

    Next it was said that the landing account and invoice were issued after the goods had been received and could not, therefore, be part of the contract of bailment: but Mr. Bradshaw admitted that he had received many landing accounts before. True he had not troubled to read them. On receiving this landing account, he took no objection to it, left the goods there, and went on paying the warehouse rent for months afterwards. It seems to me that by the course of business and conduct of the parties, these conditions were part of the contract.

  128. In the circumstances, the warehousemen were able to rely on the exempting conditions and were able to recover their charges whilst the defendant’s counterclaim was dismissed. Counsel for Elliott Construction, in his submissions, noted that the landing account had been received by the plaintiff on many occasions in the course of his dealings with the defendant, and for that reason, it had the effect of putting the plaintiff on notice of the contractual terms which it contained.

  129. It is clear that the Court of Appeal in that case was not concerned with the fact that the landing account was issued after the goods had been received. As the landing account and invoice with the terms and conditions containing the exemption clause had been provided to the defendant on many previous occasions, the Court concluded that, by the course of business and conduct between the parties, the terms were incorporated into the contract.

  130. The case of British Road Services Ltd v Arthur v Crutchley & Co. Ltd (No.1) [1968] 1 All E.R. 811 (“British Road Services Ltd v Arthur”), involved a delivery note issued in the course of a contract of bailment. Under a long established course of business between the plaintiff carriers and the defendants, delivery notes for goods transported by the plaintiffs and delivered at the defendants’ warehouse in the course of trans-shipment at Liverpool would be handed back to the plaintiffs’ lorry drivers, on the defendants receiving the goods, stamped “Received on AVC [that is the defendants’] Conditions”. The conditions included a term limiting liability to £800 per ton. A lorry load of whisky was delivered by the plaintiffs to the defendants’ warehouse. During the night the warehouse was broken into, and the whisky was stolen. On appeal, it was found that the defendants’ conditions of carriage were incorporated into their contract with the plaintiffs, and, accordingly, the liability of the defendants was limited to £800 per ton. At pp. 816-817 of his judgment Lord Pearson commented:

  131. Now I come to the terms of the contract between the plaintiffs and the defendants. It was not proved that the plaintiffs’ conditions of sub-contracting were ever sent to the defendants, and the defendants in evidence denied that they were sub-contractors to the plaintiffs. The plaintiffs’ form of delivery note contained the words:

    All goods are carried on the [plaintiffs’] conditions of carriage, copies of which can be obtained upon application to any office of the [plaintiffs].

    Under the long-established course of business between the parties, however, the plaintiffs’ driver brought his delivery note into the defendants’ office at the Cotton Street warehouse and asked in effect if he could bring his load into the warehouse. If there was room in the warehouse, the permission would be given, and the delivery note would be rubber-stamped by the defendants with the words ‘Received under AVC conditions’, followed by the date and the address of the warehouse. The delivery note, thus converted into a receipt note, would be handed back to the plaintiffs’ driver and he would bring his load into the warehouse as instructed by the warehouse foreman. If this had only happened once, there would have been a doubt whether the plaintiffs’ driver was their agent to accept the defendants’ special contractual terms. This, however, happened frequently and regularly over many years at this and other warehouses of the defendants. Also the defendants’ invoices contained the words: ‘All goods are handled subject to conditions of carriage copies of which can be obtained on application’. It may perhaps be material to add that the defendants’ conditions of carriage were not peculiar to them, but were the conditions of carriage of Road Haulage Association, Ltd. At any rate, I agree with the decision of the judge that the plaintiffs’ conditions were not, and the defendants’ conditions were, incorporated into the contract between these parties. The effect was that, while the nature of the defendants’ liability as bailees to the plaintiffs was unaffected, the liability was limited in amount to £800 per ton, which, when credit is given for sixty bottles of whisky recovered after the theft, produces a total in this case of £6,135.

  132. What is of interest in that case is that the defendants’ terms and conditions were found to have been incorporated into the contract between the parties but the plaintiffs’ terms and conditions, to which reference was made on the printed delivery note, were not incorporated into the contract. As stated in Lord Pearson’s opinion, the reason why the plaintiffs’ terms and conditions were not incorporated into the contract was because “It was not proved that the plaintiffs’ conditions of subcontracting were ever sent to the defendants and it was denied by the defendants that they were subcontractors to the plaintiffs”. By contrast, the defendants’ terms and conditions were not peculiar to them, but were the conditions of carriage of the Road Haulage Association Limited, and were incorporated into the contract by reference to the rubberstamping of the words “Received under AVC Conditions” on the delivery note.

  133. Another case relied on by Irish Asphalt in relation to the nature of contractual documents is the case of Thompson v T. Lohan (Plant Hire Limited) Ltd [1987] 1 W.L.R. 649 (“Thompson v T. Lohan”), a case in which at issue was a letter and a time sheet. This was a judgment of the Court of Appeal of England and Wales. The letter in question concerned the hire of an excavator and contained the following (p. 651):

  134. All plant hired out under the terms and conditions of the Contractors’ Plant Association conditions of hire a copy of which will be forwarded on request.

    The letter was read by a Mr Pinder on behalf of a third party and it was accepted that the initial agreement in that case was made between Mr Danby on behalf of the defendant and Mr Pinder on behalf of the third party. It was noted by Fox L.J. in his judgment (at p. 651):

    As to the position of the two individuals principally concerned, Mr. Pinder was the quarry manager of the third party, and Mr. Danby was a director of Lohan. Mr. Pinder had previously hired from Lohan and knew that Lohan traded on the C.P.A. model terms – and the judge so found.

    Fox L.J. went on to say (at p. 653):

    The first question which I deal with, although in fact it came later in the third party's submissions, is: what was the contract? Was it the bare contract to supply plant at a price, or was the plant so supplied on the C.P.A. conditions? I have no doubt that it was the latter. First, Mr. Danby's letter of 8 September made it quite clear that the hiring was to be on the C.P.A. terms; the letter says so. Secondly, the third party raised no objection to that; indeed, it is clear that is what they expected. Thirdly, it was absolutely common form in the industry. Fourthly, I should refer to some passages in Mr. Pinder's cross-examination. [His Lordship referred to passages in which Mr. Pinder said that, although he had never read the C.P.A. conditions, he knew of their existence, that the letter from the first defendants stated that the plant was hired subject to those conditions and that it was the practice and custom in the industry to hire plant subject to the conditions. His Lordship continued:] Fifthly, the form of time sheet has a note at the bottom of the sheet which says:

    All hours shown on this time sheet certified correct, an invoice charged on these hours will be accepted. C.P.A. conditions of hire to apply.

    That is signed by the operator and also on behalf of the hirer. Mr. Pinder in fact signed that time sheet and some six others which we have in the appeal bundle. Again, there is plain reference to the C.P.A. terms. In my opinion the only conclusion to be reached from those facts and evidence is that the parties entered into the contract upon C.P.A. terms. At what precise point of time the contract was concluded I need not consider. There is no doubt there was a contract and, on the evidence, in my view it was beyond doubt that such contract was on C.P.A. terms.

  135. Counsel for Elliott Construction argued that it was clear from the decision in that case that the incorporation of the terms and conditions occurred independently of time sheets, and suggested that the case was not authority for the proposition that a post-contractual document could have the effect of incorporating new terms and conditions into a contract.

  136. That case supports the proposition that terms and conditions can be incorporated by reference to specific terms and conditions in common use in that industry. Significantly, the letter of the 8th September contained the clause set out above stating the terms of the hire in question and the time sheet was relevant because it also made reference to the C.P.A. terms.

  137. The English High Court decision in the case of Photolibrary Group Ltd v Burda Senator Verlag GmbH [2008] 2 All E.R. (Comm) 881 (“Burda”) is also of interest. It concerned the role of delivery notes. The claimants in the case supplied photographs in the form of transparencies for the consideration of the defendants for publication in their magazines. The defendants would pass on their requests to one of their number who would in turn pass on the request to photograph providers. A number of photographs would be selected and sent to the defendant publishers. They would be considered, some would be published, some not. Those not used would be returned after consideration, some quickly, some not. When the transparencies were sent to the defendants, they were accompanied by a delivery note. On its face and back, it set out terms of business. They were standard terms of the British Association of Picture Libraries and Agencies. A substantial parcel of transparencies was sent out accompanied by the delivery note. While a number of transparencies were being returned, they were lost in transit between Germany and London. The terms and conditions included a term requiring the party who requested them to pay a holding fee while the transparencies were retained and also provided for payment of compensation for loss. In the course of his judgment, Jack J. said:

  138. 65.

    Mr Ayres put great emphasis on the fact that Burda Media did not sign the delivery notes, which, he submitted, showed that the terms of the notes were not accepted. If the notes had been returned signed, that would have made the defendants' position as to incorporation really unarguable. But the converse does not follow. The signature which was requested, where it was, was to acknowledge safe receipt. If the terms were not acceptable, Burda Media was asked to return the transparencies. That, of course, was never done.

    ....

    68.

     

    It follows also that I reject the submission that the deliveries of transparencies are to be considered as bare bailments with no terms apart from a term as to the return of the transparencies with an obligation to take due care of them in the meanwhile. While it is now clear that contract is not a pre-requisite to bailment – I refer to Chitty on Contracts (29th Edition, 2004) Volume II, page 176 (paragraph 33–002) – in my view, in commercial situations such as the present where goods are passed by way of business from one party to another, it will be very unusual that there will be no contract between those parties.

    Jack J. also noted:

    63.

    In my judgment the most straightforward analysis of the contractual situation is that a delivery of transparencies accompanied by a delivery note is to be treated as an offer, which was accepted by the acceptance of the transparencies and their onward transmission to Germany. In each case a contract was made in that way. It incorporated the terms of the delivery notes. That is the appropriate objective interpretation of the parties' conduct, whatever the actual intention of the defendants. However, I should say that I do not think that the evidence established any positive intention on the part of the defendants not to deal on the basis of the delivery notes. The evidence was actually to the contrary. For they knew what the terms were. They never rejected them, or said they would not be bound by them. In the early days the claimants' delivery notes were sent to Germany and loss fees were noted on Burda Media's delivery notes. I find that they negotiated loss fees on the basis that the claimants were entitled to the amounts stated in their delivery notes but could be persuaded to accept less because they wanted their businesses with the defendants to prosper. That was the appreciation on both sides. In the case of the sixth claimant, Marianne Majerus, there was an express acceptance of her terms at her meeting with Carmen Durrant in January 2004. Mr Crichton can also rely on the terms of his letter of 9 December 1996.

    64.

    The alternative analysis that the faxed requests for transparencies to be submitted were offers to submit them on the usual terms, that is, the terms of the delivery notes, which offers were accepted by the submission of transparencies accompanied by the notes, seems to be equally viable. Likewise the case can be put on the basis of an established course of dealing on the terms of the delivery notes: compare the Circle Freight case.

  139. Counsel for Elliott Construction made the comment that that decision had no application to post-contractual delivery dockets. It is correct to say that the delivery notes accompanied by the transparencies were viewed as an offer by the Court in that case and, thus, could not be described as post contractual documents; but, nevertheless, the case is of assistance, particularly having regard to the course of dealing between the parties. It is important to bear in mind that in Burda, the delivery note contained the following provision:

  140. 1.

    Any client who has not previously dealt with us on the terms and conditions set out overleaf and who does not wish to accept such terms must return all the images immediately .... The client will be deemed to have accepted our terms if all the Images are not returned within 5 days of their receipt.

    Thus, it was an option for the defendants, on receipt of the transparencies, accompanied by the delivery notes setting out the terms and conditions of the contract, to be entered into, to reject the terms and conditions and to return the goods if not acceptable. It was also clear that the defendants were aware of the terms and conditions which were set out in the delivery notes.

  141. Reference was also made to the decision of the Scottish Court of Session – Inner House in the case of Continental Tyre & Rubber Co.Ltd v Trunk Trailer Co. Ltd [1985] S.C. 163 (“Continental Tyre & Rubber Co. Ltd”). That case concerned the sale and delivery of tyres, and a claim in respect of sums due in respect of the sale of the tyres. A number of tyres had been ordered by a purchase order in a standard form; on delivery, the pursuer’s driver tendered a delivery note in standard form and this was signed by a junior employee of the defenders. An invoice was sent about ten days later. The tyres were alleged to have been rejected by customers of the defenders as not being of merchantable quality. The pursuers in that case, on the assumption that the warranty as to merchantable quality had been breached, pleaded that their liability was excluded by a reference to their standard conditions of sale on the delivery note. It was contended that this note was a counter offer accepted by the defenders. They also relied on the argument that a recent and consistent course of dealing meant that the terms of the delivery note had been incorporated into the contract. It was held in that case that the contract was concluded as soon as the first batch of tyres had been delivered and the delivery note was merely a receipt indicating quantity and description of the tyres. It did not amount to a contract note or a record of the terms on which supply was made. Also, it was pointed out that there were no averments that a signature was required before delivery. It was further held that the incorporation of the contractual term by a course of dealing depended on whether the pursuers were reasonably entitled to conclude that the defenders accepted the tyres subject to their conditions, and particularly on whether sufficient notice had been given; the delivery note was not contractual and the defenders had continued to send purchase orders bearing that their own conditions were to prevail.

  142. Lord Brand, the Lord President, in the course of his judgment (at p. 168) commented:

  143. What has been called the ‘delivery note’ does not so describe itself. It is not and does not bear to be a contract note or ‘sold’ note of the kind considered in Hardwick Game Farm v Suffolk Agricultural Poultry Producers Association [1966] 1 W.L.R. 287 .... which purported to record the terms of the parties' agreement, and which was tendered before performance. It is not and does not bear to be, either, an acknowledgement of order form, of the kind considered in Grayston Plant Ltd. v Plean Precast Ltd. 1976 S.C. 206, purporting to record the terms on which the supply is made or to be made. The signature of the defenders' employee is, as the form shows, required for one purpose and one purpose only. Opposite the box containing the signature are the following words: ‘Please note that your signature is proof that the quantity and description of the goods shown on this docket were received correctly.’ There are not averments that the legend near the top left hand corner of the docket, referring to the pursuers' ‘conditions of sale’, which is in small print and not in bold type, was ever drawn to the attention of the person who signed it, and it is not averred that signature of the docket was required before the delivery was made (cf. the very different circumstances in British Road Services Ltd. v Arthur V Crutchley & Co. Ltd. where the delivery note was overstamped, referring to the conditions upon which the warehouse keeper would receive the load, and handed to the plaintiffs' driver before he brought his lorry into the premises; see the opinion of Lord Pearson at pp. 816 and 817 ).

  144. The form in which it was contended that the terms and conditions in that case were said to be incorporated into the contract was as follows (p. 167):

  145. All offers and sales are subject to the company’s current terms and conditions of sale, a copy of which will be supplied on request.

    That case was relied on in the judgment in Noreside to which reference has been made previously.

  146. Reference was also made in the course of the submissions to Treitel on The Law of Contract (12th Ed.) at paragraph 7 – 006 where it is stated:

  147. Nature of the document:

    An exemption clause is not incorporated in the contract if the document in which it is set out (or referred to) is not intended to have contractual force: e.g. if the document is a mere receipt for payment. On the other hand, the mere fact that a document is called a ‘receipt’ will not prevent it from having contractual effect. The document will have such effect if the party to whom it was handed knew it was intended to be a contractual document or if it was handed to him in such circumstances as to give him reasonable notice of the fact that it contained conditions. It will also be contractual if it obvious to a reasonable person that it must have been intended to have this effect. This will be the case if the document is of a kind that generally contains contractual terms. Whether a document falls into this class depends on current commercial practice, which may vary from time to time.

  148. The Court is satisfied that the delivery dockets herein are contractual documents in the sense that they are documents which were created in the course of the contracts at issue in these proceedings. However, the real question is whether they are contractual documents in the sense contended for by Irish Asphalt? Chitty on Contracts (London; Sweet and Mazwell; 2012; 31st ed; volume I) at paragraph 12 – 009, puts it well:

  149. Contractual Documents:

    [T]he document must be of a class which either the party receiving it knows, or which a reasonable man would expect, to contain contractual conditions ....

  150. When one looks closely at the cases referred to above and the academic commentary, a number of points emerge. First of all, a contractual document may take a variety of forms – a landing account as in Spurling, a delivery note as in British Road Services Ltd v Arthur, a time sheet and letter as in Thompson v T. Lohan – to give some examples. Thus, a delivery docket could be a contractual document.

  151. The second point that seems to be clear from the authorities is that in those cases in which it was successfully argued that the document at issue was a contractual document, the document contained, in one form or another, the terms and conditions actually relied on. Thus, in Spurling, the document at issued was a landing account which referred on its face to conditions printed in small type on the back. Those conditions spelt out clearly the basis on which the goods were to be taken by the warehouse.

  152. The case of British Road Services Ltd v Arthur.is notable in that the defendants’ conditions were incorporated into the contract as described above, but the plaintiffs’ conditions of contract were not found to have been incorporated in the contract, in circumstances where there was no evidence that their conditions of sub-contracting were ever sent to the defendants.

  153. A third point to note is that the timing of the delivery of the relevant terms and conditions may not be the deciding factor in any given case. The decision in James A. Slattery v Córas Iompair Éireann [1972] 106 I.L.T.R. 71 (“Slattery v CIE”) (to which reference will be made later) reinforces the point that a party may be bound by terms and conditions although they sign a consignment note containing the terms and conditions of the contract after performance of the contract by one of the parties.

  154. What emerges from the authorities is that, to be a contractual document, the document must be one which contains contractual conditions or a reference to specific terms and conditions well known in a particular industry. It is not sufficient to refer in general terms to unspecified terms and conditions. The proviso on the delivery docket in this case is akin to that in the Continental Tyre & Rubber Co. Ltd case which was found not to incorporate the pursuer’s terms and conditions. The Court is satisfied that the delivery dockets, signed by Mr Hannay for the most part, on behalf of Elliott Construction, were for the purpose of recording the type of material delivered, the date of delivery and quantity delivered, and did not set out the terms and conditions of the contractual arrangement between the parties. They are not documents which “generally contained contractual terms”, as it is put in Treitel, or documents of a class which the party receiving it or which a reasonable man would expect to contain contractual conditions as Chitty on Contracts describes it. Accordingly, having regard to the facts and circumstances of this case, the Court rejects the contention that the delivery notes are contractual documents in the sense contended for by Irish Asphalt.

  155. Incorporation by signature

  156. Given the finding that the delivery dockets are not contractual documents, strictly speaking, it is not necessary to consider whether Irish Asphalt’s terms and conditions were incorporated by signature into the contracts, as a party will only be found to have incorporated terms and conditions by signature on a contractual document. However some reference will be made to the authorities relied on by the parties in this context to the extent that they could have some bearing on other aspects of the issues herein.

  157. Counsel for Irish Asphalt, in the course of his submissions, referred to the leading case of L’Estrange v F. Graucob Ltd [1934] 2 K.B. 394 (“L’Estrange v Graucob”). Scrutton L.J. at p. 403 of his judgment stated:

  158. In cases in which the contract is contained in a railway ticket or other unsigned document, it is necessary to prove that an alleged party was aware, or ought to have been aware, of its terms and conditions. These cases have no application when the document has been signed. When a document containing contractual terms is signed, then, in the absence of fraud, or, I will add, misrepresentation, the party signing it is bound, and it is wholly immaterial whether he has read the document or not.

  159. Counsel for Irish Asphalt also referred to the well known decision in the case of Curtis v Chemical Cleaning & Dyeing Company [1951] 1 K.B. 805 (“Curtis”) in which a party’s signature was described as “irrefragable evidence of his assent to the whole contract, including the exempting clauses” (p. 808). That was a case concerning a dress left for cleaning. The plaintiff signed a receipt which contained conditions exempting the cleaners from liability for damage however caused, but at the time of signing the receipt, she did so in circumstances where the assistant in the dry cleaning shop misrepresented the extent of the exemption clause, and it was held in that case, the defendants could not rely on the exemption clause by reason of the innocent misrepresentation of the shop assistant.

  160. Reference was also made to Slattery v CIE. This case related to the transport of a horse. The plaintiff in the case had signed a consignment note following the delivery of the horse. The consignment note signed by the plaintiff was headed in large heavy black print “Consignment note and delivery sheet for horses to be carried .... at owners’ risk”. Teevan J. in the course of his judgment at p. 73 noted that the plaintiff’s signature was about two or three inches below that heading. He went on the course of his judgment to observe (p. 74):

  161. Be that as it may he signed the contract and no authority has been cited to me and no convincing argument presented to avoid the plaintiff’s assent to its terms, or to support assertion that having been signed on delivery it cannot be read as the contract the parties entered into.

    Accordingly, it was found that the plaintiff bound himself by the conditions on signing the contract note.

  162. Irish Asphalt relies on the delivery dockets signed by Mr Hannay as and when goods were delivered by Irish Asphalt to Elliott Construction. It was contended that the delivery dockets were contractual documents and as such the signature by Mr Hannay on the delivery dockets was sufficient to incorporate the terms and conditions into the contract.

  163. Counsel on behalf of Elliott Construction did not take issue with the principles identified by counsel for Irish Asphalt, but did not accept that they are applicable to the facts of this case. The delivery dockets, he contended, were not contractual documents in the sense put forward by Irish Asphalt, a point which the Court has accepted. He further argued that incorporation by signature only occurs where, in the course of the formation of a contract, a document is signed which contains the terms of that contract or some of them. He added, in his written submissions, that Slattery v CIE was a case dealing with a post-contractual document, and was, in that sense, a decision which concerned acknowledgement and estoppel, rather than incorporation by signature. Teevan J. in that case had commented (p. 73):

  164. The question is whether the plaintiff can be heard to deny that the conditions set out in the consignment note signed by him form part of the contract? ‘The best way of proving (the terms of a contract) is by a written document signed by the party to be bound’ (per Denning L.J. in Olley v Marlborough Court Ltd. [1949] 1 K.B. 532 at page 549). Here we have such a document but the argument is that it must be ignored because it was signed after delivery of the horses, in other words after completion of the defendants’ part of the transaction. The plaintiff could have refused to sign the document particularly as it was not shown or its terms otherwise made known to him at the inception of carriage: the fact is that he signed it. Before signing it he was aware, needless to say, of the damage to his horse but he did not then know that the injury was likely to result in loss.

    In the concluding paragraphs, Teevan J. added (p. 74):

    I must hold that the plaintiff bound himself by the conditions on signing the contract note. It amounts to a declaration by the plaintiff of what the terms of the contract were.

    He went on to say (at p. 74):

    Having regard to the very prominent manner in which the defendants have called attention, almost at the very place where the plaintiff placed his signature, to the carriage being at owners’ risk and subject to the condition over-leaf, the plaintiff has only himself to blame for failing to notice this.

  165. The useful analysis of the decision in L’Estrange v Graucob contained in McMeel on the Construction of Contracts at paragraph 15.64 explains the position thus:

  166. In any event, in the view of Scrutton L.J., an order form was a contractual document, which invariably contained terms. In the absence of fraud or misrepresentation and, given the heading of the document, the plaintiff was bound .... Nevertheless the term was clearly incorporated in an agreement which had been reduced to writing and which had been signed. No defence of non est factum was possible, because the document clearly related to the sale of the machine. Further, a representation that the document was an order was probably true, but not relevant. What the plaintiff would have to prove in order to succeed was that there was a representation that the document contained no exemption clause.

    It is submitted that the reason why a signature is binding is because it demonstrates assent to the terms above it. There is no need to invoke arguments based on estoppel. As Lord Devlin stated in McCutcheon v David MacBrayne Limited: ‘the law is clear, without any recourse to estoppel, that a signature to a contract is conclusive’.

    Thus, a party signing a contractual document containing terms and conditions is bound by those terms and conditions regardless of whether or not they have read the terms and conditions. This is because the terms of the contract have been reduced to writing and have been signed. The key point is that the terms and conditions incorporated by signature are contained in the contractual document signed by the party sought to be bound.

  167. In the present case, the documents relied on to argue that the terms and conditions were incorporated by signature are the delivery notes. The delivery notes did not contain the terms and conditions. They contained a proviso that “the material is sold subject to the terms and conditions available on request”, but, in the view of the Court as explained previously, this is not sufficient for the purpose of incorporation by signature. The party, to be bound, must know what the terms and conditions are (for example, by reference to specific, well known, industry wide terms and conditions on the contractual document, such as the A.V.C. conditions in the British Road Services Ltd v Arthur case) or by setting out the specific terms and conditions relied on in the document to be signed. A bland reference to terms and conditions alone cannot suffice. It could not be said that the inclusion of such a proviso on a delivery docket is reducing the terms of the contract to writing. How is one supposed to know what those terms and conditions are? As McMeel put it, “a signature is binding because it demonstrates assent to the terms above it.” Thus, the Court is satisfied that the terms and conditions were not incorporated into the contract by the signature of the party to be bound as the delivery dockets could not be regarded as contractual documents.

  168. Incorporation by Actual or Reasonable Notice

  169. The learned trial judge in his judgment dealt with the question of notice in some detail. He commented on the disparate outcomes to be found in the cases dealing with the question of notice. As he said (para. 251):

  170. The transport cases seem to establish that purchasing a ticket which contains conditions means that you can be bound by the conditions whether you have read them or not; that possibly you are not bound if you do not know that the ticket contained any such conditions; that if you know there is writing on a ticket and believe that it sets out conditions, you are bound whether you read them or not; and even if you do not believe the ticket contained conditions, you will nonetheless be bound if reasonable notice was given.

  171. He referred at para. 251 to the case of Richardson Spence & Co. Ltd v Rowntree [1894] A.C. 217, which concerned a passenger who had been handed a folded ticket. There was writing on the ticket when opened, and it contained conditions which limited liability for any loss on the journey (para. 251 of the High Court Judgment):

  172. As the plaintiff did not know that the writing contained conditions and as it was held that the transport company had not done that which would have been sufficient to give the plaintiff notice of these conditions, an award, unlimited by the relevant condition, was upheld on appeal.

    As the learned trial judge continued:

    Many of the cases as to notice remain peculiar to their own facts.

  173. He then referred to a number of well known decisions on the question of notice. Thus, in Thornton v Shoe Lane Parking Ltd [1971] 2 Q.B. 163, it was found that an exclusion clause could not be relied on as the particular clause could not be observed by a person entering a car park with an automatic ticket machine. Lord Denning M.R. explained the reasoning behind that decision as follows (p. 169):

  174. .... the offer was contained in the notice at the entrance giving the charges for garaging and saying ‘at owner's risk,’ i.e., at the risk of the owner so far as damage to the car was concerned. The offer was accepted when Mr. Thornton drove up to the entrance and, by the movement of his car, turned the light from red to green, and the ticket was thrust at him. The contract was then concluded, and it could not be altered by any words printed on the ticket itself. In particular, it could not be altered so as to exempt the company from liability for personal injury due to their negligence.

    In that case, for the plaintiff to have observed the particular term relied on he would have had to exit his car, and walk around the car park until he found on an internal pillar opposite the ticket machine the set of printed conditions in a panel.

  175. Reference was also made to the case of Olley v Marlborough Court Ltd [1949] 1 K.B. 532. That case concerned the hire of a hotel bedroom. It was found that the contract between the party hiring the bedroom and the hotel was made before the guest had access to the bedroom. In the hotel bedroom, there was a notice which sought to limit the hotel’s liability in respect of valuables that had not been deposited with the hotel. Mrs Olley found that furs and jewellery and other items were missing from her bedroom at a later stage during the course of her stay. The hotel tried to restrict its liability in respect of the loss by reliance on the notice in the plaintiff’s bedroom. Denning L.J., in the course of his judgment (at p. 549), commented:

  176. Now people who rely on a contract to exempt themselves from their common law liability must prove that contract strictly. Not only must the terms of the contract be clearly proved, but also the intention to create legal relations – the intention to be legally bound – must also be clearly proved. The best way of proving it is by a written document signed by the party to be bound. Another way is by handing him before or at the time of the contract a written notice specifying its terms and making it clear to him that the contract is on those terms. A prominent public notice which is plain for him to see when he makes the contract or an express oral stipulation would, no doubt, have the same effect. But nothing short of one of these three ways will suffice .... So, also, in my opinion, notices put up in bedrooms do not of themselves make a contract. As a rule, the guest does not see them until after he has been accepted as a guest. The hotel company no doubt hope that the guest will be held bound by them, but the hope is vain unless they clearly show that he agreed to be bound by them, which is rarely the case.

  177. The learned trial judge contrasted those cases with the decision in the case of Shea v Great Southern Railways Co. [1944] 1 Ir. Jur. Rep. 26 in which a receipt, indicating that a bicycle was carried on public transport at the owner’s risk, and that the ticket was issued “subject to the company’s rules and regulations” was held to have excluded liability for a damaged bicycle, even though the master copy of the terms and conditions was covered up by the opening of the door of the bus. It was pointed out that the essence of limitation was recorded on the receipt. That may explain the difference. By contrast, in Ryan v Great Southern and Western Railway Co. [1898] 32 I.L.T.R. 108, a reference on a train ticket to terms and conditions which was not readily available was not sufficient to exclude liability.

  178. For completeness, reference should be made to an ex tempore decision of the High Court (Barrington J.) in the case of O’Beirne v Aer Rianta, (Unreported, High Court, 20 May 1987) (“O’Beirne”). The facts of that case were very similar to those in Thornton v Shoe Lane Parking Ltd. Barrington J. came to a different conclusion, stating:

  179. One thing that caused me some trouble was [counsel for the plaintiff’s] submission that in fact the contract was over by the time the plaintiff received his ticket, but I don't think that is so. I know all the evidence, the witnesses for the plaintiff accepted but it appears to be the case,that, for practical purposes, the driver of the car was committed to the car park once he had turned into the narrow passage or avenue leading to the car park. It will be difficult for him to retreat. Nevertheless, .... [counsel for the plaintiff] submits once he was in the car park he was subject to the minimum charge for being in the car park, but nevertheless the ticket, on its face, says the placing of a vehicle in the car park shall be deemed as acceptance of the conditions. That would appear to be an admission on the part of Aer Lingus (sic) that the motorist isn't bound until he has placed his car in the parking position and therefore it appears that had the plaintiff read the conditions and had he decided he did not like the conditions he would have been entitled to leave the car park without paying anything. He might have had difficulty in retreating or not but it appears to me that Aer Lingus (sic) couldn't keep him indefinitely in the car park if he did not wish to accept the terms and he would be entitled to leave if he did not accept the terms.

  180. That decision is the subject of some criticism in McDermott on Contract law at para. 8.25. As he pointed out:

  181. The judgement of Lord Denning M.R. in Thornton does not appear to have been considered by Barrington J. and it is not even clear whether it was cited by counsel in argument ....

    The Court is not of the view that the decision in O’Beirne is of any assistance in this case.

  182. It was contended on behalf of Irish Asphalt that the learned trial judge failed to have regard to the fact that the Elliott Construction had actual notice of the terms and conditions prior to the commencement of the contract or contracts for the supply of materials at Ballymun. It was accepted that a credit note had been received by Elliott Construction on the 31st January, 2004 and two were received on the 30th June, 2004. It was submitted on behalf of Irish Asphalt that, once this had been established, Elliott Construction attempted to change the emphasis of their arguments by stating that the credit notes were only seen by those involved in the accounts department and not by senior management. It was also pointed out that Elliott Construction had conceded that Mr Hannay was aware of the proviso on the delivery notes, as indeed was Mr Elliott.

  183. The Court does not agree with the submission on behalf of Irish Asphalt to the effect that the learned trial judge did not have regard to the fact that Elliott Construction had actual notice of Irish Asphalt’s terms and conditions before the contract began. At para. 254 of the judgment, the learned trial Judge dealt comprehensively with the evidence in relation to the question of actual notice. He referred to a number of items of correspondence between the parties which Irish Asphalt relied on to demonstrate that Elliott Construction had received the terms and conditions. For example, one was a template letter of the 29th January, 2003, announcing the opening of the quarry at Bay Lane. The letter was sent by way of a mail merge and was identified in an affidavit of discovery as if terms and conditions were printed on the back. The learned trial judge commented as follows (para. 254):

  184. This was formally sworn to in an affidavit by Irish Asphalt as being a copy in that form. It is not. The original letter was discovered by Elliot Construction. I have seen the letter. It does not have the terms and conditions on the back. The back is blank.

  185. The trial judge went through the items relied on by Irish Asphalt and found that those items did not contain copies of the terms and conditions. Counsel for Irish Asphalt accepted that he was not in a position to challenge the finding of the learned trial judge in relation to those documents.

  186. Having considered the evidence of Ciara Cassidy, on behalf of Irish Asphalt, and Patrick Elliot as to the correspondence, the trial judge made an observation in the course of para. 254 of the judgment in the following terms:

  187. Of these documents the most fundamental are the template letter of 29th January 2003 and, most importantly, the promotional letter to Mr. Dolphin of 30th January 2003 which is based on it. Were it not for the fact that Elliott Construction kept a copy of this letter, I would have been under the impression that by reason of the system supposedly in place the terms and conditions had been notified as at the time when Irish Asphalt began to deal with Elliott Construction. As regards the price increase letter and the price quotation letter I am urged to rely on the supposed system. I accept that Patrick Elliott is an honest witness. The apparent challenge to his evidence, in contrast, by way of office systems does not establish a probability to counter his evidence. The systems are established by the evidence, instead, as random. It is clear that they were not systematically followed.

    The learned trial judge also rejected the suggestion that the credit notes could be viewed as providing actual notice stating (para. 254):

    Claiming back credit for relatively small errors is not a reasonable context within which the party in error as to price charging is to announce a limitation clause for all future contracts. Such discourse is unlikely to be noticed. It does not concern the formation of a contract but the true performance of an existing obligation by reference only to price and perhaps, on occasion, to quantity.

  188. The Court is satisfied that, contrary to the contention of Irish Asphalt in relation to the question of actual notice, the learned trial judge had regard to the evidence in relation to actual notice, and found as a fact that there had not been such notice in respect of the formation of the contract between the parties relating to the Ballymun project. The role of the credit notes will be further considered later in the course of the judgment as they were relied on before the trial judge to establish a system of dealing between the parties.

  189. The issue then arises as to the correctness of the view of the trial judge as to whether or not Irish Asphalt had given reasonable notice of its terms and conditions to Elliott Construction at any stage. In the course of his judgment, the learned trial judge stated at para. 251:

  190. There is very little in terms of amplification of the fundamental principle that a party seeking to rely on an exclusion or limitation clause must give the party to be bound reasonable notice of that clause.

    As Sir Kim Lewison put it in the Interpretation of Contracts at p. 126:

    The degree of notice will vary according to the nature of the terms sought to be incorporated.

  191. The trial judge was clearly in agreement with that view as he stated at para. 251 as follows:

  192. Sometimes the approach of the courts seems to depend on the onerousness of the clause in question. In Thornton v Shoe Lane Parking, Lord Denning M.R. referred (at 170) to clauses which are ‘so wide and so destructive of rights that the court should not hold any man bound by it unless it is drawn to his attention in the most explicit way’. Rhetorically, he referred to some clauses as requiring ‘to be printed in red ink with a red hand pointing to it – or something equally startling’. This dictum based on the reasonableness of notice of an apparently unattractive exclusion clause has been developed by some later decisions so that unusually onerous clauses are required, as Dillon L.J. noted in Interfoto Library v Stiletto Ltd. [1989] Q.B. 433 at 438 to 439, to be ‘fairly brought to the attention of the other party’. This suggests an analysis of the quality of the clause as opposed to the quality of the notice whereby any clause in issue was incorporated into a contract.

  193. The delivery dockets were relied on by Irish Asphalt to argue that the proviso on the delivery dockets in which reference was made to terms and conditions, together with the three credit notes and/or the three credit notes, amounted to reasonable notice of the terms and conditions or, in the alternative, incorporated the terms and conditions by a course of dealing.

  194. In support of his arguments in this regard, counsel for Irish Asphalt referred to a passage from McMeel in The Construction of Contracts (at p. 430) where the following observation was made:

    The second alternative route of incorporation is by reasonable notice. This is the principal mode of incorporation for unsigned printed documents. It first came to prominence in the nineteenth century ‘ticket cases’ as the Industrial Revolution and the railway age made standard terms a feature of everyday life. In the leading case of Parker v South Eastern Railway Company, Mellish L.J. distinguished the case of incorporation by signature and continued:

    The parties may, however, reduce their agreement into writing, so that the writing constitutes the sole evidence of the agreement, without signing it; but in that case there must be evidence independently of the agreement itself to prove that the defendant has assented to it. In that case, also, if it is proved that the defendant has assented to the writing constituting the agreement between the parties, it is, in the absence of fraud, immaterial that the defendant had not read the agreement and did not know its contents. Now if in the course of making a contract one party delivers to another a paper containing writing, and the party receiving the paper knows that the paper contains conditions which the party delivering it intends to constitute the contract, I have no doubt that the party receiving the paper does, by receiving and keeping it, assent to the conditions contained in it, although he does not read them, and does not know what they are.’ – see (1877) 2 CPD 416, 420.

    This passage suggests that in the ordinary case it is sufficient to prove that a document containing terms was provided by one party to or sent to the other and was retained without demur. As with incorporation by signature, Mellish L.J. was emphatic that reading or familiarity with the terms was irrelevant.

    In Circle Freight International Ltd. v Medeast Gulf Exports Ltd., the invoices each stated in small print at the bottom: ‘All business is transacted by the company under the current trading conditions of the [ISF] a copy of which is available on request’. This was, in the words of Bingham L.J., both “clear and legible” and “placed immediately below the price where the eye would naturally light on it”. The exporters never requested a copy and none was sent. Having reviewed the authorities Taylor L.J. concluded:

    It is not necessary to the incorporation of trading terms into a contract that they should be specifically set out provided that they are conditions in common form or usual terms in the relevant business. It is sufficient if adequate notice is given identifying and relying upon the conditions and they are available on request.

  195. Lewison in the Interpretation of Contracts (at p. 127) commented:

  196. It is not necessary to the incorporation of trading terms into a contract that they should be specifically set out provided that they are conditions in common form or usual terms in the relevant business. It is sufficient if adequate notice is given identifying and relying upon the conditions and they are available on request. Clear words of reference suffice to incorporate the terms referred to. Other considerations apply if the conditions or any of them are particularly onerous or unusual. In Interfoto Picture Library Ltd. v Stiletto Visual Programmes Ltd., Interfoto ran a photographic transparency lending library. Following a telephone inquiry by Stiletto, Interfoto delivered to them forty seven transparencies together with the delivery note containing nine printed conditions. Condition 2 said that all the transparencies had to be returned within fourteen days of delivery otherwise a holding fee of £5 per day and Value Added Tax would be charged for each transparency retained thereafter. Stiletto, who had not used Interfoto services before, did not read the conditions. Dillon L.J. said:

    It is in my judgment a logical development of the common law into modern conditions that it should be held .... that, if one condition in a set of printed conditions is particularly onerous or unusual, the party seeking to enforce it must show that that particular condition was fairly brought to the attention of the other party.

    In the present case, nothing whatever was done by the plaintiffs to draw the defendants' attention particularly to condition 2; it was merely one of four columns’ width of conditions printed across the foot of the delivery note. Consequently condition 2 never, in my judgment, became part of the contract between the parties.

  197. The passages cited above from McMeel and Lewison on incorporation by notice are useful summaries of the relevant case law, particularly the reference to the case of Interfoto Picture Library Ltd v Stiletto Visual Programmes Ltd [1989] Q.B. 433 (“Interfoto”). Bearing in mind the passages referred to, it would be useful then to consider the observations of the trial judge as to whether or not there was reasonable notice in this case. At para. 257 of the judgment the learned trial judge said:

  198. Looking at this contract of sale from the point of view of Irish Asphalt, it was entitled, should it have so chosen, to seek to limit its liability by reference to an exclusion clause. As a matter of law, incorporation of the exclusion clause in the contract requires it to take reasonable steps to that end. It is obvious what it thought such reasonable steps were. Firstly, it drew up a one page template letter. Instead of being a one page letter, this could have been a two page letter with all of the terms and conditions as part of the text. After all, the terms and conditions are not voluminous and would fit readily on a page. Its expectation was that each template letter would be placed on standard notepaper which had the terms and conditions clearly printed on the back. Anyone who was proposing to buy from the new Bay Lane quarry, therefore, would have known, from the very start, that if the material that he/she purchased was not of good quality, and would ruin any building into which it was put, that his/her recourse would be limited to the purchase price of the material. This, for the reasons stated, is a highly onerous clause and one which would otherwise not be expected. It would leave the builder to lose his reputation and possibly his profit, and more, should the material turn out not only to be of bad quality but also to be actively dangerous to the contemplated construction project. Therefore, it was entirely reasonable for Irish Asphalt to set out its terms and conditions from the very start. This it failed to do; though that is probably what it would have done had office systems been reliable. It also felt that it was worthwhile to remind customers, on every price increase, that liability was so severely limited. There is no evidence in this case that such notice was ever given to Elliott Construction. Then it has delivery dockets with every delivery it makes. These merely recite that the delivery is made subject to terms and conditions. The delivery docket is generated as evidence of delivery. What term or condition did Irish Asphalt regard as important in the context of such delivery? It was certainly not the limitation clause. As regards the person to whom such a notification of an onerous limitation clause should be made before any contract was entered into, it is clear again that Irish Asphalt, by choosing the purchasing manager of Elliott Construction, Tom Dolphin, or indeed by writing to any appropriate executive in that firm, felt that notification of this exclusion clause should be made at the top level. This is reasonable because notification is then reliable; the people who would make any relevant decision within the company are to be told. They can then make the crucial decision to buy what may be unreliable or even destructive building materials without recourse. This may be argued that it should be regarded as reasonable notice. Because of an error in notepaper, this reasonable step in notification was not taken by Irish Asphalt. I do not regard isolated instances where terms and conditions appear in the context of Elliott Construction seeking to be reimbursed for overcharging through an accounts system that no one would reasonably expect would involve people at the level of Tom Dolphin, or any decision making level as to the formation of important contracts, to be reasonable notice.

  199. When one examines that passage in the light of the passage referred to above from Dillon L.J. in the judgment in Interfoto, the views of Charleton J. take on additional force, bearing in mind the onerous nature of Clause 8. In the present case, not only were the terms and conditions not printed on the delivery notes, there is nothing to suggest that the actual terms and conditions, and, in particular Clause 8, were ever brought to the attention of anyone in Elliott Construction. In Interfoto where a delivery note did contain the specific terms and conditions sought to be relied on, that was not found to be sufficient to incorporate the term into the contract in circumstances where the evidence demonstrated that that term had not been brought to the attention of the parties sought to be bound by it. That being so, and in circumstances where not only was there no evidence as to any steps taken by Irish Asphalt to bring its terms and conditions to the attention of Elliott Construction, but where the delivery notes themselves did not contain the terms and conditions, the contentions on behalf of Irish Asphalt as to the incorporation by way of reasonable notice cannot succeed by reference to the phrase used on the delivery dockets alone.

  200. The question then arises as to the role of the credit notes which did contain Irish Asphalt’s terms and conditions. One point to bear in mind is that the credit notes were furnished to Elliott Construction by Irish Asphalt prior to the formation of the relevant series of contracts. The second point to note is that the credit notes were provided to the accounts department of Elliott Construction, and evidence was given by Patrick Elliott to the effect that the personnel in the accounts department who would have seen the credit notes were not at a managerial level within the company, a fact accepted by the trial judge. Regardless of the question of the status of the personnel within the accounts department, there was no evidence to suggest that the provisions of Clause 8 of the terms and conditions of contract set out in the credit notes were ever drawn to the attention of any representative of Elliott Construction.

  201. Complaint is made by Irish Asphalt that, in considering the question of reasonable notice, the trial judge adopted an incorrect test, in that he introduced a test that a company is only bound by an exclusion clause if it is brought to the notice of senior management level within the company. Reference was made to the position of Mr Hannay, the foreman who signed the delivery dockets, and it was contended that the evidence established that he was a senior person within the company. Charleton J. at para. 252 of the judgment stated:

  202. Here, unlike in many of the cases, we are not dealing with an individual. Both plaintiff and defendant are corporations. This is of a degree of importance. It is reasonable, in the context of contract law, to have regard to the fact that a decision that a limitation clause should be incorporated into a contract would be made at senior management level within a company that might later seek to rely upon it. It would also be reasonable to expect that such a corporation would notify any other corporation that it seeks to be bound by that limitation clause at the same level. Even if that were not so, ordinary sense would suggest that the rule in contract law whereby reasonable notice should be given of an exclusion clause requires that the concept of reasonableness should incorporate at least a potential analysis as to whether the corporation which is expected to be bound by the clause would be notified in a reasonable way. In terms of ordinary sense as to the workings of corporate structures, this requires notification at a level within the corporation which might reasonably be expected to be effective in terms of bringing the clause to the attention of the appropriate decision making level within that corporation. It is thus of significance that a choice was made by Irish Asphalt to notify the terms and conditions by way of a marketing letter that was addressed to Elliott Construction at high level where these kinds of decisions might reasonably be expected to be made after appropriate analysis as to the risks and consequences of entering into such a contract with such a limitation clause.

    He went on to conclude that Mr Hannay was a responsible person within the company but that his responsibility was limited. He was the on-site foreman.

  203. The manner in which the contracts were dealt with was that there was an original engagement between Mr Elliott and Mr Lagan on behalf of Irish Asphalt. They agreed the terms of the contracts in relation to this particular project. Thus, they agreed on such matters as price, terms of credit, cost of delivery and so on. Thereafter, from time to time, and as and when required, individual deliveries were made to the site in accordance with those terms. Undoubtedly, the day to day orders were placed by Mr Hannay but there is nothing to suggest that he had any involvement beyond deciding what quantity of Clause 804 was required on any given day; he accepted deliveries duly made, and did so by means of his signature on the delivery docket.

  204. The negotiations between the parties prior to the commencement of this project took place at a high level. In order to give reasonable notice of the terms and conditions relied on by Irish Asphalt, it is logical to conclude that such notice should be provided at the same level. It would be somewhat surprising to reach the conclusion that reasonable notice of an exclusion clause could be given to the party to be bound by informing a low level member of staff of the existence of the exclusion clause. In this case, there is no doubt that Mr Hannay is a valued and responsible member of staff but he could not have negotiated the terms of the contract between the parties, and it is hard to see how the giving of notice as to an exclusion clause to someone in his position could satisfy a requirement as to reasonable notice, even if such notice had been given to Mr Hannay. It could not be suggested on the facts of this case that Mr Hannay was in a position to renegotiate terms of the contract such as price. To put it very simply, notice to a person in the position of Mr Hannay would not be reasonable notice. These observations are equally applicable to the personnel in the accounts department. Obviously, every case will turn on its own facts and circumstances. Looking at the overall situation and the nature of the dealings between the parties, the Court is satisfied that the approach taken by Charleton J. in the context of this case was correct, as was the conclusion that reasonable notice of the actual terms and conditions sought to be relied on was not provided by Irish Asphalt to Elliott Construction.

  205. Incorporation by Course of Dealing

  206. There was a course of dealing between the parties but the question arises as to whether that course of dealing could have incorporated the terms and conditions into the contract between the parties. Comprehensive written submissions dealt with the topic of incorporation by course of dealing. Counsel for Irish Asphalt in his oral submissions placed particular emphasis on the observations of Lewison, op. cit. at p. 129 et seq. Lewison had the following to say:

    Terms may be incorporated by a previous consistent course of dealing between the parties, or by their common understanding.

    In some cases although the standard terms have not been drawn to the attention of the contracting party before the conclusion of the contract in question, nevertheless he is bound by them because of the pre-existing course of conduct, or a common understanding between the parties. Incorporation of terms by prior course of dealing is a question of fact and degree. It depends on the number of previous contracts, how recent they are, and their similarity in terms of subject matter and the manner in which they were concluded. As Lord Pearce said in McCutcheon v Macbrayne (David) Limited:

    It is the consistency of a course of conduct which gives rise to the implication that in similar circumstances a similar contractual result will follow. When the conduct is not consistent, there is no reason why it should still produce an invariable contractual result.

    Accordingly, where a previous course of dealing does not exhibit consistency, it will not have the effect of incorporating terms. Likewise, as Donaldson J. said in Salsi v Jetspeed Air Services Limited:

    Usage apart, no one can contend that he has usual trading conditions if he has never used them or brought them to the attention of anyone.

    In general a large number of transactions will require to be proved before the Court will permit one party a contract to rely on a course of dealing in order to rely upon standard terms of business. In cases of contracts made between commercial organisations of equal bargaining power, it seems that less stringent standards are applied as compared with consumer contracts. In view of the Unfair Contract Terms Act 1977, which gives wide protection to consumers against exemption clauses, it is questionable whether this approach is justified any longer.

    However, in cases where the number of transactions proved is insufficient to amount to a course of conduct, it is still possible that standard terms will be held to have been incorporated into a contract. In British Crane Hire Corp. Ltd. v Ipswich Plant Hire Ltd., it was proved that the hirer of a crane expected that the hire would be subject to conditions imposed by the supplier. However, there was no course of dealing between the parties, and the actual terms of business of the supplier had not been drawn to the attention of the hirer before the contract was concluded. Nevertheless, the supplier’s terms were held to have been incorporated into the contract of hire. Lord Denning M.R. (with whom Megaw L.J. agreed) said:

    I would not put it so much on the course of dealing, but rather on the common understanding which is to be derived from the conduct of the parties, namely, that the hiring was to be on the terms of the plaintiffs' usual conditions.

    Sir Eric Sachs gave a slightly different reason. He said that the terms were incorporated because on the facts the supplier was entitled to conclude that the hirer accepted its conditions.

    It was urged on the Court by counsel for Irish Asphalt that the observations of Lewison in the passage referred to above are a correct summary of the law.

  207. The general proposition identified by Lewison, namely, that terms may be incorporated by a previous consistent course of dealing between the parties, or by their common understanding, is hardly controversial. Thus, if in the course of a consistent period of dealing, the parties to a contract entered into a series of contracts including terms and conditions, actually known to the party to be bound or drawn to their attention, and that if, on the conclusion of a subsequent contract, the party relying on the terms and conditions omitted to either draw the terms and conditions to the other party, or failed to include them on a contractual document, it would be wrong to permit the party affected by the relevant term to say that, even though they were aware of the terms and conditions, they could avoid its consequences because the relevant term was not expressly incorporated into the subsequent contract.

  208. Obviously, in considering whether a party’s terms and conditions have been incorporated into a contract, it is necessary to consider the facts and circumstances of each individual case. It has already seen that in the case of Spurling referred to above, one of the factors taken into account was the course of business and conduct of the parties. In the passage previously referred to from the judgment of Denning L.J. (at p. 467 of the judgment), it was stated as follows:

  209. On receiving this landing account, he took no objection to it, left the goods there, and went on paying the warehouse rent for months afterwards. It seems to me that by the course of business and conduct of the parties, these conditions were part of the contract.

  210. By contrast, in the case of Hollier v Rambler Motors (AMC) Ltd [1972] 2 Q.B. 71, the evidence was that the plaintiff had had his car serviced by the defendant on three or four occasions during a five year period. The plaintiff in that case had signed a document described as an invoice. It contained the following clause (p. 75):

  211. The company is not responsible for the damage caused by fire to customer’s cars on the premises.

    The plaintiff had signed the form on at least two previous occasions when repairs had been carried out to his car. The car was damaged by fire while on the defendants’ premises. It was held that the defendants were liable because three or four transactions in the course of five years were not sufficient to establish a course of dealing; the clause on the invoice form could not therefore have been incorporated in the oral contract made between the parties.

  212. Reference was also made in the submissions to the case of McCutcheon v David MacBrayne Ltd [1964] 1 W.L.R. 125, a decision of the House of Lords. In that case, the course of dealing was described as follows by Lord Reid (at p. 128):

  213. If two parties have made a series of similar contracts each containing certain conditions, and then they make another without expressly referring to those conditions it may be that those conditions ought to be implied. If the officious bystander had asked them whether they had intended to leave out the conditions this time, both must, as honest men, have said ‘of course not’.

  214. It would also be helpful to refer to an Irish authority on the subject, namely, the decision of the High Court in Sugar Distributors Ltd v Monaghan Cash & Carry Ltd (in Liquidation) [1982] I.L.R.M. 399. That was a case which concerned a “retention of title” clause. It was a condition of sale contained on the front of the plaintiffs’ invoices sent out to customers that ownership of the sugar to be delivered would only be transferred to the purchasers when the full amount of the purchase price had been discharged. One of the issues in the case was whether the clause shown on the face of the invoices was a binding condition. In that case, Mr McAllister, the managing director of the defendant company, said that his attention was not drawn to the retention of title clause either by phone or letter. In relation to invoices, he was only concerned to check each for quantity and price. He did not read all the small print on the invoices. He did notice a change in the form or size of the invoices. The manager of the defendant company, a Mr Murphy, said that he could not remember being told by anyone about the retention of title clause. It was held that the plaintiffs had failed to prove that the special attention of the defendants was drawn to the retention of title clause which was introduced by the plaintiffs approximately two years after the parties had first commenced trading with each other. On that basis Carroll J. identified the question arising as whether there was a duty on the plaintiffs to draw the defendants’ attention to the clause specifically, or whether the defendants ought to have known of the existence of the clause because it was on all invoices for a period of about fifteen months before the relevant dates. She said (p. 401):

  215. I have been urged by Mr. Gleeson for the defendants to hold as Barrington J. held in Western Meats Ltd. v National Ice and Cold Storage Ltd [1982] ILRM 99 that the plaintiffs had not given the defendants reasonable notice of the contents of their standard conditions.

    But the circumstances of that case are not similar to the present one. There was a businessman offering a specialist service (i.e. cold storage) but accepting no responsibility for it. There the business relationship was commenced by a meeting followed by a letter, in the text of which there is no mention of standard conditions. Here there is a supplier of goods, the plaintiffs, incorporating a condition of sale via its invoices which according to the cases cited has apparently become quite common. The managing director of the defendant company said he did not read it and that he never read the small print on invoices but apparently if he had read it, it would not have made any difference to him. The invoice itself is a simple enough document. Three conditions appear on its face and they are not intimidating in complexity.

    I consider that the defendants having received these invoices for fifteen months, ought reasonably to have known the terms on which the goods were supplied. In my opinion the plaintiffs gave reasonable notice of the conditions applicable to these transactions by putting them on the face of the invoices and there was no special duty on the plaintiffs to draw the defendants’ attention specifically to the retention of title clause. I therefore hold that the condition was a valid and binding condition.

  216. Carroll J. referred in her judgment to the judgment of Barrington J. in Western Meats Ltd v National Ice and Cold Storage Co. Ltd & Nordic Cold Storage Ltd [1982] I.L.R.M. 99, a decision of the High Court. The circumstances in that case were that the plaintiffs had placed meat with the defendants for storage in cold storage facilities, and, subsequently, the defendants were unable to locate the plaintiffs’ meat within their facility. The conditions of trade relied on by the defendants by way of defence included a clause to the effect that all goods were stored at the owner’s risk. There was a further provision providing that the company would not be responsible for any delay, loss or damage arising from maintaining too high or too low a temperature in the stores, failure of machinery or plant, negligence, thefts, including theft by the company’s servants, “or any other cause whatsoever”. In the course of the judgment, Barrington J. identified the question as to whether the plaintiffs were given reasonable notice of the conditions or not. Evidence was given that Mr Lyons, a director of the plaintiff company, was not aware of them, and there was no evidence that they were ever expressly brought to his attention. In the early years, when the parties first started dealing with one another, the conditions and terms sought to be relied on by the defendants did not appear on their letters. In later years, it appears that the conditions were set out on the back of the defendants’ notepaper and also on the back of many of their storage documents. Barrington J. concluded that the terms were never expressly brought to the attention of the plaintiffs’ director. In those circumstances the defendants were found to be guilty of negligence and breach of contract.

  217. In the present case, great emphasis is placed on the fact that in the course of the dealings between Irish Asphalt and Elliott Construction, some eleven hundred and ninety delivery dockets containing the proviso “This material is sold subject to the terms and conditions available on request” were provided by Irish Asphalt to Elliott Construction and signed by a representative of Elliott Construction, usually Mr Hannay. The Court is satisfied that the terms and conditions relied on and, in particular Clause 8 of the terms and conditions, cannot be incorporated into the contract by relying on the delivery dockets alone in circumstances where those delivery dockets did not actually set out the terms and conditions and were not contractual documents. The position in this case can be contrasted with the position in many of the cases cited above, for example, Spurling, Hollier v Rambler Motors (AMC) Ltd and Burda where the terms relied on were set out in the contractual documents. What about the position in relation to the credit notes which contained terms and conditions on the back including Clause 8 and which were undoubtedly furnished to Elliott Construction prior to the commencement of these contracts?

  218. The existence of the three credit notes does not demonstrate the sort of consistent course of dealing or conduct which could result in the incorporation of terms and conditions in a contract. It is worth remembering the circumstances in which the credit notes came to light. At para. 255 of his judgment, Charleton J. observed:

  219. In addition, I note that in the course of the case a box of correspondence and business documents was handed over by Elliott Construction to Irish Asphalt. Of all the varied correspondence in this box, only three credit notes contain the terms and conditions on the back. There are three further credit notes among these documents which are on original Irish Asphalt notepaper which have no terms and conditions on the back. In addition to that, there are two others with no terms and conditions on the back and here the Irish Asphalt notepaper is photocopied and not professionally printed.

    This could hardly be regarded as the conduct necessary to establish a course of dealing such that that the terms and conditions relied on by Irish Asphalt could be said to have been incorporated into the contracts between the parties by a course of dealing.

  220. For the reasons set out above, the Court is satisfied that, despite the very careful and extensive submissions of counsel on behalf of Irish Asphalt, the terms and conditions relied on have not been incorporated into the contract between the parties on any basis put forward by Irish Asphalt. Given that the Court is satisfied that the terms and conditions relied on by Irish Asphalt have not been incorporated into the contract between the parties, it is not necessary to consider whether Clause 8 of the terms and conditions was fair and reasonable having regard to the provisions of s. 55(4) of the 1893 Act, as inserted by s. 22 of the 1980 Act.

  221. The Issues Arising under European Law

  222. Assuming this was a matter of purely national law, and the standards invoked national standards, then this Court would come to the following conclusions:

    1. That the contract required Clause 804 and therefore required compliance with the standard;

    2. That such standard was adopted to facilitate the marketing of the product, and that, accordingly, the time at which compliance of the standard was to be assessed was first at the time of delivery of the product;

    3. It was however possible by subsequent testing to prove that as of the date of delivery, the particular product did not, as a matter of probability, comply with the standard. Also since under the Construction Products Directive products were intended to satisfy the essential requirements during an economically reasonable working life, breach could be proved by evidence of testing during such lifetime;

    4. That the testing protocols identified in the appendix to the standard were not, and could not be, the only method of determining compliance;

    5. That the evidence here was sufficient, in light of the judge’s conclusion, that the product could not have complied with the standard on the day of delivery and later demonstrate the degree of deterioration found in 2009, to demonstrate that there had been a breach of the standard both in 2009 and as of the date of supply and therefore a breach of the contractual term requiring compliance with it;

    6. The contract also incorporated a term as to merchantability pursuant to the Sale of Goods and Supply of Services Act 1980, and that the term had not been excluded by the parties though they were entitled in law to do so;

    7. That the implied term as to fitness for particular purpose made known to the seller did not arise on the facts in this case, but that the evidence did establish breach of the term as to merchantability, and that the provisions relied upon by the defendant seeking to limit liability, had not been incorporated within the contract between the parties.

  223. Accordingly, 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.

  224. However Irish Asphalt here contend that any such conclusions are inconsistent with, and precluded by, the law of the European Union. More immediately they contend that sufficient issues have been raised to require a preliminary reference to the Court of Justice of the European Union (“CJEU”) pursuant to Article 267 of the Treaty on the Functioning of the European Union (“TFEU”).

  225. As this Court is a court of final appeal, there is a mandatory obligation on it to refer questions of European law to the CJEU where the resolution of the case involves a question of European law and where the resolution of that issue is not, by virtue of the law of the European Union as interpreted by the CJEU, obvious, or as the well known phrase describes, acte clair. The test which must be applied by a national court in deciding whether a reference is required is identified in Case C-283/81 C.I.L.F.I.T. Srl v Ministero della Sanita’ [1982] ECR 3415 (“CILFIT”). One difficulty facing national courts considering the question of whether or not to refer one or more questions to the CJEU is not merely that the threshold in CILFIT is low, but that the parties arguments inevitably focus not upon the correctness of the proposition contended for, but simply its arguability. This will often mean, in effect, seeking to establish a lack of clarity in the existing law. This test provides a perverse incentive to parties seeking references to search not for clarity, but for doubt, uncertainty and conflicting views. In this rather unreal world, the absence of any authority or academic support for a proposition becomes an argument to be deployed as to why the views of the CJEU should be obtained on, what on this argument becomes, a novel argument. This is no criticism of the exhaustive and thorough arguments advanced by Irish Asphalt in this case but rather an observation of the structure to which those arguments are required to conform,. It is necessary and important however to seek to identify with some clarity the precise arguments made which are said to be both necessary for the determination of this dispute between the parties and can be said to be not so obvious so that a reference to the CJEU is required.

  226. There are two aspects of this case which Irish Asphalt contend raise issues of European law requiring a reference to the CJEU. These relate to the two separate findings of breach of contract made in the High Court: first, that the product supplied did not comply with the standard for Clause 804; and second, that it did not comply with the implied term as to merchantability, which was part of the contract between the parties by virtue of the provisions of the 1980 Act.

  227. In relation to the first argument, Irish Asphalt say that the finding of breach of contract for failure to comply with the standard itself involves a question of interpretation of those standards by reference to the specific question of whether total sulphur content was specified, or available to be specified, and perhaps more comprehensively, whether the testing protocols were mandatory both as to the manner of testing and the time thereof, so that it was only possible to prove either breach or compliance at the time and by the tests contemplated by the protocols. These questions raise further questions as to the status of standards whether mandated or not adopted pursuant to the mechanisms established by the Technical Standards Directive as to such standards are law, soft or hard, and whether a standard adopted may itself be the subject of a preliminary reference under Article 267 TFEU which provides that the CJEU shall have jurisdiction to give preliminary rulings concerning the interpretation of the Treaties or the validity and interpretation of acts of the institutions, bodies, offices or agencies of the Union.

  228. On the second finding of breach of contract by reference to the implied term as to merchantability, Irish Asphalt argue that the effect of the High Court Judgment, either of its own force, or by reason of the provisions of statute, has been to introduce new standards of “inertness” “durability” and “strength” which are incompatible with the standard, and furthermore have not been notified in accordance with the provisions of the Directive. Accordingly, Irish Asphalt argue that those terms must be disapplied by this Court in what it acknowledges is, a private law dispute between itself and Elliott Construction. Again, Irish Asphalt acknowledge that this would amount to the giving of limited indirect horizontal effect to a Directive but they argue that this follows unavoidably from the decisions in Case C-194/94 CIA Security International v Signalson SA & Securitel SPRL [1996] E.C.R. I-2201 (“CIA”) and Case C-443/98 Unilever Italia SpA v Central Food SpA [2000] E.C.R. I-7535 (“Unilever”) which were also decided in the field of standards albeit in a somewhat different context. The difficulty of this question and the degree to which it has been debated, the difference of views between the CJEU and the Advocates General in some of the decisions, means, it is said, that even if the Court were inclined to reject Irish Asphalts’s argument in this respect on grounds that to accept the argument would be to offend the general principle against indirect horizontal effect laid down in Case C-91/92 Faccini Dori v Recreb Srl [1994] E.C.R. I-3325 (“Faccini Dori”), the Court could not do so without first referring the question to the CJEU. Finally, an in the particular context of this case, they point to the observations made by Weatherill in a comment upon the decision in CIA in “Breach of Directives and Breach of Contract” [2001] 26 (2) EL REV 177-186 where the author appeared to raise an issue similar to that argued by the appellants:

  229. The opportunities for parties seeking to escape obligation that have become unappealing because of changing market conditions are real, and await the attention of ingenious legal minds ready to exploit the Unilever ruling. Might it be argued, for example, that a party in England to whom goods are delivered that are not of “satisfactory quality” within the meaning of section 14 of the Sale of Goods Act (as amended) can nevertheless not refuse to accept the goods on the basis of their non conformity with the statutory condition because the United Kingdom has not notified the Sale and Supply of Goods Act 1994 to the Commission?

  230. Irish Asphalt also rely on specific provisions of Annex ZA of European Standard EN 13242:2002 implemented by Irish Standard IS EN 13242:2002, which provides at ZA.1 that “[c]ompliance with these clauses confers a presumption of fitness of the aggregates covered by this European Standard for their intended uses indicated herein”. Irish Asphalt argue that this presumption of fitness for intended use is relevant to the issue arising as to merchantability which is itself a question of fitness for purpose. It is argued that compliance with the Standard therefore satisfies the term implied by s. 14 (2) of the 1893 Act as inserted by s. 10 of the 1980 Act, or at least creates a presumption of compliance which could only be rebutted by testing carried out in accordance with the protocols set out in the Standard. In this regard Irish Asphalt seek to invoke the arguments they already made in respect of the finding of a breach of contract by direct breach of the Standard.

  231. The Court is conscious of its obligation in law to refer to the CJEU any issue which properly requires reference, in accordance with the terms of Article 267 TFEU, as interpreted by the CJEU. Such a reference does not however come without costs to the litigants, this Court and indeed the CJEU itself. It inevitably delays judgment in a dispute between the parties, increases costs and necessarily increases the burden on the CJEU already labouring under an extensive workload. It is important therefore to go beyond the level of generalisations and consider with some care the precise issues arising and to determine whether conscientiously applying the decision of the CJEU in CILFIT, a question or questions arise which it is necessary to refer in order to decide the case. It follows that there may be issues on which there is a degree of uncertainty, which if squarely raised would require a reference but which on analysis, it is apparent are not necessary to decide in order to decide the case. By the same token it may be possible to decide a case on grounds of national law, or by application of EU law in relation to which there is or can be no dispute. In such cases it will not be necessary to decide contentious issues of European law which are raised in the case and therefore not necessary to refer a question.

  232. It is important not to lose sight of the fact that this is a private law dispute between two private parties in respect of the quality of goods supplied by one to the other, and as it happens, wholly within this jurisdiction. The Standards and their interpretation become part of this case only because Elliott Construction ordered and agreed to buy, and Irish Asphalt agreed to supply, Clause 804 which is taken to mean a product complying with the specification in the Standards. Other than the private contractual agreements between the parties there was no other legal requirement to do so: neither Irish law nor European law required the use of product meeting the Standards. The parties could have contracted for inferior, better, or simply different, material.

  233. By the same token, the terms as to merchantability and fitness for purpose are implied into the contract by statute because this was a contract for the sale of goods. Again, however, there is no sense in which, as a matter of law, these terms were imposed upon the parties against their will. Since this was not a consumer transaction, s. 55 of the 1980 Act imposed no restraint on the parties excluding, altering or modifying the terms implied by the statute. All the 1980 Act does in such a case, like its 1893 predecessor, is to set a default position against which the parties can make their own agreement. Here the default position is one which sensibly accords with the expectation of most people carrying out transactions for the sale of goods i.e. that the product will be merchantable and fit for any specific purpose if made known to the supplier. But the parties could if they wished come to some different agreement and make either more specific and demanding (or just as possibly less demanding) terms, and in each case, perhaps with a consequential adjustment of price. The implication of the terms by statute seeks to facilitate parties and therefore facilitate commerce and to provide some transparency, clarity and commercial efficacy by incorporating a term the meaning of which is reasonably clear and agreed upon and understood by buyers and sellers (even if as this case shows, there is still room for some dispute at the margins). The parties remain free to depart from that standard and agree specific terms. But where they do not do so, the legal position as a matter of Irish law is the same as if the parties here, instead of specifying Clause 804, had somewhat laboriously set out all the specifications for the product, and the method of testing in the contractual document itself, and had expressly agreed that the product would be of merchantable quality and indeed also agreed what that meant. The High Court Judge’s finding amounts in Irish law to a finding that Irish Asphalt had, albeit unwittingly, been in breach of the terms of its agreement with Elliott Construction, in that, on the High Court’s findings, it had not supplied to Elliott Construction what it had agreed to provide. This is a breach of a private law obligation and not any provision of public law.

  234. Irish Asphalt’s submissions lay particular stress on the provisions of the Technical Standards Directive laying down procedure for the provision of information in the field of technical standards and regulations. That Directive was adopted in the context of the so called “new approach” to the securing of the internal market to permit the free movement of goods, services and capital. Article 1.2 of that Directive defines a technical specification as “a specification contained in a document which lays down the characteristics required of a product such as levels of quality, performance, safety or dimensions”. Standard is defined as a “technical specification approved by a recognised standardisation body for repeated or continuous application, with which compliance is not compulsory” (Article 1.4). This sub-article goes on to state that the standard could be an international, European or national standard. The Directive also defines “technical regulations” as (Article 1.9):

  235. technical specifications and other requirements, including the relevant administrative provisions, the observance of which is compulsory, de jure or de facto, in the case of marketing or use in a Member State or a major part thereof, as well as laws, regulations or administrative provisions of Member States, except those provided for in Article 10, prohibiting the manufacturing, importation, marketing or use of a product.

    Article 2 of the Directive requires that the Commission and the standardisation bodies be informed of new subjects in respect of which the national standardisation bodies have decided to prepare or amend a standard. The Directive then requires Member States to provide assistance for communication by the Member States of any proposal to adopt a new standard. The Commission may, pursuant to Article 6, request the European Standardisation Institution to draw up the European Standard during a given time period. Article 7 then requires that during the preparation of the European Standard the standardisation bodies of Member States do not take any action which could prejudice the harmonisation intended. Article 8 requires Member States to immediately communicate to the Commission any draft technical regulation, other than one merely transposing the full text of an international or European standard. Article 9 provides for a standstill provision while the Commission is considering any draft national regulation.

  236. It may be noted that the Directive seeks to achieve harmonisation of national standards and regulations by a requirement of notification by national standards setting bodies’ observation of a standstill period and an obligation to refrain from adopting national standards which are not completely in line with the existing European standards. While standards adopted by the European standards bodies are properly described as European standards in a general sense, the bodies are not institutions or bodies of the EU and are not established by the law of the EU.

  237. Irish Asphalt points to European Standard EN 13242: 2000 for aggregates for unbound and hydraulically bound materials for use in civil engineering work and road construction. This is drawn up the by the European Committee for Standardisation (“CEN”) pursuant to whose internal regulations, members are obliged to given effect to the European Standard as a national standard. It relies in particular on Annex ZA described as “informative”. Annez ZA is entitled “Clauses of this European Standard addressing essential requirements or other provisions of EU Directives”. Annez ZA.1 is entitled “Scope and relevant characteristics” and it states:

  238. This European Standard and this Annex have been prepared under a mandate given to CEN by the European Commission and the European Free Trade Association.

    The clauses of this European Standard shown in this annex meet the requirements of the mandate given under the European Construction Products Directive (89/106/EEC).

    Compliance with these clauses confers a presumption of fitness of the aggregates covered by this European Standard for their intended uses indicated herein; reference should be made to the information accompanying the CE marking.

    WARNING Other requirements and other EU directives, not affecting the fitness for intended uses, can be applicable to aggregates falling within the scope of this annex.

    Note 1 In addition to any specific clauses relating to dangerous substance contained in this Standard there may be other requirements applicable to the products falling within its scope (e.g. transposed to European legislation and national laws, regulations and administrative provisions). In order to meet the provisions of the EU Construction Products Directives these requirements need also to be complied with when and where they apply.

    [emphasis added]

  239. In pursuance of the obligations imposed on members of CEN, the National Standards Authority of Ireland (“NSAI”) adopted Irish Standard IS EN 13242:2002. which is in identical terms to EN13242:2002

  240. It is a curiosity of this case (and perhaps more than that) that Irish Asphalt’s submissions focus almost entirely on the provisions of the Technical Standards Directive, and the contents of Annex ZA as creating a presumption (almost irrebuttable) of fitness for intended use. It appears to this Court however that a broader focus is necessary. It seems clear that if the presumption of fitness for intended use referred to in Annex ZA has any legal effect it cannot be by virtue of its inclusion in the Annex alone, and cannot be derived from the Technical Standards Directive. In fact, as indeed Annex ZA seems to make clear, the presumption is a consequence of the fact that the harmonised standards and aggregates were produced pursuant to a mandate issued by the European Commission on the 6th of July 1998 pursuant to the “Construction Products Directive”. The effect of a mandated standard is well described at page 493 of Chalmers et al, op. cit:

  241. There are two types of European Standard: mandated and unmandated standard. Mandated standards are where the Commission calls upon the European Standardisation bodies to draw up a standard. In this mandate they will set down certain safety parameters that these bodies must observe. The majority of standards adopted by the standardisation bodies, over 75% are unmandated. These standards are not initiated by the Commission but by the standardisation bodies themselves. The effect of a mandate are twofold:

    The first is that the product is presumed to be “safe” under the General Product Safety Directive [Directive 2001/95/EC on General Product Safety Article 3(2)]. States can still impose restriction on its marketing when the threshold is higher than would otherwise be the case. Whereas Article 30 EC allows for restrictions to be imposed on grounds of public health wherever there is scientific uncertainty about the risk posed by a product, the General Product Safety Directive allows for restrictions to be imposed only where there is evidence that it is dangerous. The onus of proof is reversed. Whereas Article 30 EC requires the safety of goods to be proved, here it is its danger that must be proved before restrictions can be imposed. This has been criticised both for making industry too central in a setting of levels of health and safety and consumer protection, and for unduly restricting the discretion of Member States.

    The second effect of a mandate is that compliance with the standard entitles the product to free circulation around the European Union, however, also carry a safeguarding provision, which allows a Member State to prohibit the marketing of the goods if it is liable to endanger public safety, property or the safety of animals. It must, however, immediately inform the Commission ....

    Unmandated standards have some legal effects. They set market expectations of safety and reliability and are often relied upon in contracts between private parties. They also give them some public recognition. In addition the General Product Safety Directive notes that an element to be taken into consideration in determining whether a product was safe is whether it meets an unmandated standard.

    [emphasis added]

  242. The Construction Products Directive provides at Article 2 that Member States shall take all necessary steps that products which are intended for use in works (i.e. construction works) may be placed on the market only if they are fit for this intended use, that is to say that they have such characteristics that the works in which they are to be incorporated assembled, applied or installed, can, if properly designed or built, satisfy the essential requirements referred to in Article 3, when and where such works are subject to regulations containing such requirements. The essential requirements such products are required to satisfy are, by Article 3, set out in terms of objectives in Annex 1 to the Directive. Article 4.2 provides that Member States shall presume that products are “fit for their intended use” if, in essence, they bear the EC mark indicating they comply, inter alia, with the relevant national standards transposing the harmonised standards. Article 6 requires that Member States shall not impede the free movement placing on the market or use in their territory products which satisfy the provisions of this Directive.

  243. Finally in this regard, it is worth noting that the protocols for testing upon which Irish Asphalt rely (being EN932-1 test for general properties of aggregates, test for sampling EN1097-6, test for mechanical and physical properties of aggregates and EN 1744-1 test for chemical properties of aggregates), are all adopted as European standards, pursuant to the obligations imposed by membership of CEN-CENELEC (CENELEC: The European Committee for Electrotechnical Standardisation) Ireland adopted such standards as national standards without alteration. These standards however, are not mandated standards. There is no procedure established by the standards bodies for the interpretation of a standard or the resolution of any dispute as to their meaning, which accordingly becomes a matter for a court to resolve if it arises in any dispute.

  244. In the light of the foregoing it is now possible to return to the issues raised by Irish Asphalt and upon which it is said a reference to the CJEU is necessary. Again, it is useful to distinguish between the issues raised in respect of the finding that the Clause 804 supplied to Elliott Construction and used in Ballymun Civic Centre did not comply with the standards for Clause 804, on the one hand, and to the finding of breach of contract on the basis that the Clause 804 was not of merchantable quality on the other.

  245. There is no doubt that aspects of this case involve the interpretation of Irish Standards adopted pursuant to European Standards: first, the mandated standard in respect of aggregates (EN 13242) and second, the non- mandated standards for testing (EN 932-1, EN 1097-6 and EN 1744-1). Furthermore there was considerable argument about the proper interpretation of those Standards and how compliance or non compliance was to be established. If therefore, those Standards can be described as acts of the “institutions, bodies, offices or agencies of the Union” then it is argued that it would be appropriate to refer the question of the interpretation to the CJEU. One question which may arise here therefore is the logically anterior question of whether the standards, mandated or unmandated are, particularly in the private law context of this case, properly to be described as acts of the institutions, bodies, offices or agencies of the Union. Even then a question arises as to whether, when a standard is incorporated by parties in a private contract and breach is alleged, the interpretation of the term is a matter of European law or purely domestic law. It is said that that itself is a question which must ultimately be decided by the CJEU unless the answer to the question is so obvious as to not require reference.

  246. However, the finding of breach of contract by reference to breach of the standards was only one of the basis on which the Court found that there had been a breach of contract. The High Court also found that there was a breach of the implied term of merchantability which finding this Court would as a matter of national law uphold. If there is no referable issue in relation to that determination, then Irish Asphalt’s appeal against the High Court determination would fail and it would not be necessary to consider the question of the interpretation of the standards by reference to Clause 804. Accordingly it is necessary to consider Irish Asphalt’s contention that this aspect of the case also raises issues of European law which must be referred to the CJEU.

  247. Irish Asphalt rely heavily on the decisions in CIA and Unilever and the comments made in the Unilever decision by Professor Weatherill already set out at paragraph 157 above. Those cases, they say, are examples of the Technical Standards Directive having effect in litigation between private parties. Thus it is argued that this disposes of any preliminary objection that Irish Asphalt’ case involves impermissible horizontal giving impermissible horizontal effect to a Directive contrary to the decision in Faccini Dori. However CIA involved an attempt by one party to enforce the provisions of a national standard adopted in breach of the explicit requirements of the Technical Standards Directive as to publication and notification, and therefore constituted a plain breach of Article 4.2 of the Directive. Arguably therefore, the nature of the action was more important than the identity of the actor. Unilever undoubtedly involved a further step. There, the dispute was an entirely private law and contractual matter rather than one of enforcement of a national regulation. But, equally, there the Italian provision was relied on to reject the olive oil had been notified in accordance with the Directive, but the standstill period had not been observed. Again, this was a plain breach of the provisions of the Directive. Neither of these cases therefore addressed the issue which arises here which is whether the provisions of the Sale of Goods and Supply of Services Act, or those provisions as interpreted by the High Court Decision can be said to be the adoption of standard or technical regulation contrary to the provisions of the Technical Standards Directive.

  248. Standing back from the intricate detail of the documents, commentary and argument in this case, it is worth considering the necessary sweep and extent of the argument made on behalf of Irish Asphalt. Counsel accepted that the argument was bold and indeed revolutionary. If Irish Asphalt’s argument is correct, then there has been a dramatic shift in the law relating to the sale and supply of goods even when involving goods sold to a consumer, and the law relating to defective products and product safety and product liability generally. Hitherto it has been a well accepted principle, not limited to the common law, that liability in contract for a defective product may arise independent of fault, and it is accordingly no defence in contract to show that a product was manufactured with care and indeed in accordance with existing best practice if the product subsequently proves defective and dangerous. It was also always possible to demonstrate in a product liability claim or a claim for negligent manufacture, that even if samples taken on supply passed scrutiny the product actually delivered was defective. By the same token it was possible to establish that the existing standard no longer accorded with best practice or the requirements of the law. Now however, if Irish Asphalt is correct the effect of the adoption of a standard is that if a product is produced in accordance with the standard then it is presumed fit for purpose, and indeed that presumption could only be rebutted with difficulty, if at all, by proof by tests at the time of manufacture and supply that the product did not in fact meet the standard (even if the testing showed that the product as defective more generally). All claims, whether contractual, tortious or statutory would be reduced to the question whether the product complied with the standard, as assessed by the tests approved, and at the time of supply.

  249. The adoption and promulgation of standards has an obvious area of intersection with issues of contractual clarity, product safety and liability as indeed is illustrated by the first issue in this case in relation to the interpretation of the Standard in the context of a contractual dispute. The fact that the parties contracted for the sale and supply of a product in respect of which there is a mandated standard means that the resolution of the contractual dispute between the parties may depend upon the terms of such a standard. This is not surprising. A standard, whether national, European, or international, is after all intended to assist contracting parties in providing an agreed and standard definition as to content. Furthermore, standards are not arbitrarily chosen, but will instead aim to ensure acceptable function, safety and durability among other things. In that sense standards complement other aspects of the law addressed to market access, competition, contractual clarity, product safety and liability for defective products whether by statute or by private law of negligence or contract. It is entirely conceivable that the adoption of the standard will have some interaction with these areas of law, and may have a significant impact in practice. But while it is conceivable and indeed expected that the law relating to the adoption of standards will complement the law on product liability or consumer protection, for example, it has not been suggested until now that it supplants all that law entirely, so that all claims are reduced to a question of whether the product complied with the standard. Indeed, if Irish Asphalt is correct, then that issue in turn must be determined by the application of testing protocol at the point of supply (at a time when the product is within the possession of the supplier and its characteristics within its knowledge), rather than at the point when an alleged defect arises (when the product is in the hands of the purchaser or consumer). This would be a radical, indeed revolutionary change in a large area of the law of considerable importance not merely within Member States but in areas of law pursuing important objectives of the European Union. It must be said therefore that there is not the slightest hint in either the Technical Standards Directive or the Construction Products Directive or in the extensive commentary thereon, both official and academic, that such a dramatic alteration in the law and indeed in the relative positions of producer and purchaser and user, was to be contemplated.

  250. Approaching this issue at the more precise level of the terms of the relevant instruments, it becomes important to consider once more the relative importance in this case of the Technical Standards Directive when compared with the Construction Products Directive. In our view, the Construction Products Directive is of particular importance, albeit that it did not feature significantly in the argument on behalf of Irish Asphalt. The Technical Standards Directive relates to all technical standards, whether mandated or not, and imposes obligations important but limited, of notification, publication, circulation and standstill pending consideration of the documents. It does not however say anything about the legal significance of the adoption of a standard. It is the Construction Products Directive which contemplates mandated standards, and confers upon products complying with such mandated standards certain legal consequences. In particular, compliance with the mandated standards creates a presumption, relied upon in this case by Irish Asphalt, of fitness for intended use. It is to be noted that EN 13242 is a mandated standard whereas the testing standards EN932-1, EN1097-6 EN17434-1 are not.

  251. When considered closely, it seems apparent that the Construction Products Directive appears intended to operate entirely in the area of access to the market. This is apparent from a number of the recitals which, for example, identify as an impetus for the adoption of the Directive, paragraph 71 of the “White Paper on Completing the Internal Market” approved by the European Council in June 1985 which placed emphasis on certain sectors including construction, and that the removal of technical barriers in the construction field called for a definition of the essential requirements to which construction works must comply. The recital further states:

  252. Whereas these essential requirements provide the basis for the preparation of harmonised standards at European level of construction products; whereas, in order to achieve the greatest possible advantage for a single market, to afford access to that market for as many manufacturers as possible, to ensure the greatest possible degree of market transparency and to create the conditions for a harmonized system of general rules in the construction industry, harmonised standards should be established as far as, and as quickly as possible.

    [emphasis added]

    Later the recitals records that:

    Whereas a product is presumed fit for use if it performs to a harmonized standard, a European technical approval or a non-harmonized technical specification recognized at Community level;

    ....

    Whereas products thus considered fit for use are easily recognizable by the EC mark; whereas they must be allowed free movement and free use for their intended purpose throughout the Community.

    [emphasis added]

  253. Thus Article 2 at the outset of the Directive obliges Member States to:

  254. [T]ake all necessary measures to ensure that the products referred to in Article 1, which are intended for use in works, may be placed on the market only if they are fit for this intended use, that is to say they .... satisfy the essential requirements referred to in Article 3.

    [emphasis added]

    By Article 4(2) it is provided that Member States shall:

    [P]resume that the products are fit for their intended use if they enable works in which they are employed, provided the latter are properly designed and built to satisfy the essential requirements referred to in Article 3, and those products bear the EC mark.

    [emphasis added]

    Article 6 then contains the important provision that:

    Member States shall not impede the free movement, placing on the market or use in their territory of products which satisfy the provisions of this Directive.

    [emphasis added]

    Article 6.2 however provides that Member States:

    [S]hall, however, allow products not covered by Article 4(2) to be placed on the market in their territory if they satisfy national provisions consistent with the Treaty.

  255. The important focus of this Directive seems to be ex-ante regulation of access to the market, not the ex-post determination of defects in a contractual dispute between parties. Compliance with the Directive confers the significant benefit (and achieves the important Treaty objective) of permitting the product to circulate freely with the EU. But compliance with the Directive says nothing about subsequent contractual disputes between private parties.

  256. Even if the Construction Products Directive concept of “fitness for intended use” is capable of being taken out of its legal context, and because of a verbal similarity to the time honoured phrase “fitness for purpose” derived from the 1893 Act considered to create some presumption of fitness for purpose pursuant to a term implied under the 1980 Act, then the implemented Directive still only creates a presumption of fitness such purpose, which in this case can be said to have been comprehensively rebutted on the evidence. Irish Asphalt argue that the presumption could only be rebutted by proof of non compliance with the Standard and thus by the tests set out in the testing protocol (and thus recycling the argument as to proof of compliance with the standards). However there is if anything greater difficulty in accepting this. The presumption is of fitness for intended use, not compliance with the Standard. Indeed, if Irish Asphalt is correct, and the only method of rebuttal of the presumption is proof of non compliance with the Standard, then, logically, that would mean that the presumption does not properly arise, not that it arose but was been rebutted. At its highest therefore Irish Asphalt’s argument in this regard seems to be that proof of compliance with a mandated standard creates a presumption of fitness for purpose for the purposes of the implied term as to merchantability. But fitness for purpose may be disproved and the presumption rebutted by proof that the product was not in fact fit for purpose. This does not appear sufficient for Irish Asphalt in this case.

  257. It is necessary here to advert to a further potentially complicating argument relating to the question of a limit for sulphur discussed above and considered at paragraphs 111 to 124 as to whether a limit of 1% for sulphur is specified by, or pursuant to, the standard EN13242:2002. While for reasons already discussed it is not necessary for Elliot Construction to establish the existence of such a limit to prove its case, it may be relevant to the claim made by Irish Asphalt in relation to the effect of the presumption. The trial judge found that a limit for sulphur was established by a guidance note to Standard EN13242:2002 which was issued by the NSAI in 2004: S.R.21:2004: “Guidance on the use of I.S. EN13242:2002 – Aggregates For Unbound and Hydraulically Bound Materials For Use in Civil Engineering Work and Road Construction”. It is clear that Irish Asphalt did not test for the presence of sulphur, consistent perhaps with the contention that no such limit was specified. If a limit was specified and not tested for, it might be argued that, even if Irish Asphalt was correct in every part of its argument, it would not avail it, because it could not show compliance with the standard such as to enable it to rely on the presumption contained in Annex ZA. That in turn may however depend upon an interpretation of the European standard which Irish Asphalt contends is a matter upon which a reference is necessary.

  258. Turning to the Technical Standards Directive, upon which Irish Asphalt place more reliance, it is noteworthy that the legal obligations contained therein, addressed to Member States, apply in the context of the adoption of national standards or regulations. Member States must notify and publicise the adoption of a national standard and allow for a standstill period for a national implementation to allow for the possibility of consultation and/or the consideration of the adoption of a European standard. It is these obligations (publication notification and standstill) that were breached by Belgium and Italy in CIA and Unilever respectively. Looked at in this way and leaving aside the controversy as to indirect horizontal effect, the decisions are relatively straightforward in that they seek to insist upon the performance by the Member States of the notification and standstill obligations placed upon them by the law of the EU. However, those decisions do not go so far as to suggest that they can be applied, outside the field of the adoption of national standards or regulations, to pre-existing law on the sale of goods and court decisions interpreting such laws in the context of a private contractual dispute. There was perhaps understandably, a certain lack of clarity in Irish Asphalt’s submissions when pressed to explain how the situation in this case could be brought within the template of this CIA / Unilever line of authority or any plausible extension thereof. In particular what was the standard or regulation alleged to have been adopted in breach of the obligations imposed under the Technical Standards Directive which should lead to the reversal of the High Court Decision? By whom was the standard or regulation adopted: the High Court (or indeed this Court) in a decision on the interpretation of the term implied into the contract between the parties, or the Oireachtas when it permitted the implication of a term in the contract, most recently by the terms of the 1980 Act albeit in this respect essentially re-enacting the provisions of the 1893 Act? In either case, what is it that can be said to be a breach of Ireland’s obligations under the Directive?

  259. Approached at this level, it must be said that it seems difficult to bring this case within the terms or structure of the Technical Standards Directive. It seems that the decision of the High Court cannot be considered to be the adoption of a standard requiring notification and standstill pursuant to the Directive. The Directive does not appear to contemplate or provide for a procedure in the context of judicial proceedings such as these. It seems clear that the High Court cannot be said to be a national “standardisation body” identified in Annex 2 to the Directive to whom the obligation of notification is addressed, nor can its decision be said to be a “technical specification approved by a recognised standardisation body.” A judgment, even a draft judgment, could not be said to be a “draft standard containing the text of a technical specification concerning a given subject which is being considered for adoption in accordance with the national standard procedure” which is required to be notified. In any event, as a matter of law, the decision of the High Court and indeed this Court, is no more than the interpretation and application of requirements of the 1980 statute.

  260. It also seems that the 1980 Act cannot itself be considered a “standard” for the purposes of the Technical Standards Directive. It is not a “technical specification” approved by a recognised standardisation body for repeated or continuous application with which compliance is not compulsory. It was argued therefore that it amounted to a technical regulation. But such regulations are (as previously stated) (Article 1.9 of the Standards Directive):

  261. technical specifications and other requirements including the relevant administrative provisions, the observance of which is compulsory, de jure or de facto, in the case of marketing or use in a Member State or a major part thereof, as well as laws, regulations or administrative provisions of Member States, except those provided for in Article 10, prohibiting the manufacture, importation, marketing or use of a product.

    It does not appear easy to fit the 1980 Act in to this definition however broadly it is interpreted. It is undoubtedly a law but it does not prohibit the manufacture, importation, marketing or use of a product. Even assuming so, the obligation on Member States in respect of such technical regulations is, pursuant to Article 8, to immediately notify “any draft technical regulation”. This appears to refer to a draft of a measure intended to be introduced. It may for that reason that the hypothetical referred to by Professor Weatherill refers to 1994 legislation in the UK which post dated the Directive. Again, it is difficult to see how this definition even on the most generous interpretation can be made applicable to the 1980 Act. The hypothetical query raised by Professor Weatherill, upon which Irish Asphalt place such reliance was an observation made in passing in the course of a short comment intended to highlight what the author considered undesirable aspects of the Unilever decision. It is understandable that Irish Asphalt place heavy, indeed almost exclusive, reliance on this observation. But so far as counsel’s researches suggest, there does not appear to have been any further discussion on this point by this or any other distinguished author.

  262. This Court is however conscious that in the context of considering a reference it should not adopt too narrow a reading of the Technical Standards Directive, or indeed the decisions of the CJEU. Furthermore, it should consider the issue of a reference to the CJEU by engaging in the sometimes difficult task of considering hypothetical arguments, and whether they might conceivably be considered meritorious in some Member States. While the Court has some difficulty in accepting that that argument by reference to the law of the European Union can lead to a result where Irish Asphalt succeeds in this appeal, Irish Asphalt has raised a number of issues which cannot be said to be so clear or self evident as to not require a reference, applying the low threshold established by CILFIT, and the Court cannot in conscience rule out the possibility that such issues either separately or cumulatively might at some level be capable of being resolved in a manner that could have some impact on the outcome of the case. Accordingly, the Court considers itself obliged to make a reference pursuant to Article 267 TFEU.

  263. It is necessary finally to acknowledge the very considerable assistance the Court received from the submissions made. In this case the papers prepared for this Court were extremely extensive given not only the lengthy hearing in the High Court, but the very detailed and complex legal arguments submitted on this appeal. The preparation of papers for this Court was exemplary. The papers and particularly the authorities and materials were organised by reference to individual issues in a logical fashion clearly labelled and indexed and the relevant extracts clearly highlighted. Considerable thought went into the planning, preparation and presentation of the books submitted to the Court and achieved a standard which all parties with appeals to this Court should be able to meet but rarely do. It is a regrettable fact that this Court is often presented with badly planned, poorly organised and often irrelevant material supplemented by a flurry of last minute documentation which make the case more difficult for the Court, and the parties. That should not be acceptable in any court but particularly in a court of final appeal. When papers are prepared to a high standard that also deserves comment, acknowledgement and appreciation from the Court.


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