GLOBAL BARRISTERS

JUDGMENT

MT Højgaard A/S (Respondent) v E.ON Climate & Renewables UK Robin Rigg East Limited and another (Appellants) [2017] UKSC 59

Fitness for Purpose With a Deficient Industry Standard

Case Summary

The Respondent Contractor had agreed to design, fabricate and install the foundation structures for 60 offshore wind turbines in the Solway Firth for the Appellants who were companies in the same group that would own and operate the wind farms.

The design was required to comply with, amongst other requirements, paragraph 3.2.2.2 of the "Technical Requirements" provided by the Appellants. Paragraph 3.2.2.2 required the Contractor to prepare the detailed design of the foundations in accordance with the DNV industry standard J101 and that:

“The design of the foundations shall ensure a lifetime of 20 years in every aspect without planned replacement. The choice of structure, materials, corrosion protection system operation and inspection programme shall be made accordingly.”

After installation of the wind turbines, it came to light that there was an error in J101 which meant that the axial capacity of the grouted connections in the wind farm foundations had been substantially over-estimated.

Compliance with J101 had been the basis for ensuring a 20-year design life, which was now in question.

The Supreme Court found the Contractor liable to comply with the 20-year fitness for purpose obligation despite obligations elsewhere in the contract to exercise reasonable skill and care, and to comply with J101.

The Judgment can be accessed here.

Lessons Learnt

Despite the rigorous review and approval process that most industry standards go through prior to release, it is not uncommon for industry standards to contain errors. Some of these errors, if undetected, could result in under-design which will need to be made good. Designers and contractors should therefore be prepared to carry out their own technical due diligence of the industry standards that they sign up to use, especially anything that is relatively new to market.

Where a contract specifies compliance with a list of industry standards and there is a separate contractual provision stipulating a given fitness for purpose, both need to be satisfied. Compliance with the former cannot be used to demonstrate compliance with the latter in the unfortunate event that an industry standard is found to be lacking and unable to achieve fitness for purpose in itself.

Where a designer or contractor does not intend to commit to more than the exercise of reasonable care and skill and compliance with the industry standards specified in the contract, then this intention should be made clear in the contract.

Authored by Michael Dickin