The recent case of MT Hojgaard a/s (“MTH”) and  E.ON Climate and Renewables UK Robin Rigg East  Limited & Others (“EON”) considered this point. One  of our lawyers had the opportunity to sit with the judge  throughout the trial and we eagerly awaited the decision.

The judgment has now been published and the simple  answer is – as always – it depends on the wording  of the contract. The judge decided that MTH was  liable to ensure a minimum service life for the works  notwithstanding that it had exercised reasonable skill  and care when executing the design and had relied on  an accepted industry standard that was subsequently  found to be defective.

The case related to the design and construction  of foundations for sixty wind turbines for the Robin Rigg offshore wind farm in the Solway Firth. The foundations were formed of a steel monopile and transition piece. The grouted connection between the  monopile and transition piece failed causing movement  in the structure. The cost of the remedial works was  estimated to be around €26.25 million.

The design of the grouted connection was based on an  international standard produced by Det Norske Veritas  (“DNV”), an independent classification and certification  agency. DNV standards are widely accepted by the  industry and formed part of EON’s specification for the  project. Unfortunately, the standard was wrong. This  was only discovered after the project was completed.

The contract required MTH to design and construct  the works with the due care and diligence expected  of appropriately qualified and experienced designers.  In addition, the works were to be designed and  constructed in accordance with good industry practice,  were required to comply with the specification (including  the DNV standard) and to be fit for the purpose set out in the specification. The specification referred to a  design life of twenty years and a minimum service life of  twenty years.

Who was responsible for the failure? EON argued that  MTH had an absolute obligation to ensure a minimum  service life of 20 years for the foundations and, in any  event, MTH had not used reasonable skill and care when applying the DNV standard. MTH argued that it was reasonable  for it to follow an internationally recognised standard and in doing so had  exercised reasonable skill and care.

The two key issues were: (i) was MTH’s design obligation limited to  complying with the DNV standard or did it assume an absolute obligation  to achieve the minimum service life of 20 years; and (ii) could the  “absolute” and “reasonable skill and care” obligations exist side by side  in the contract? In particular, were the terms concerning “design life”  (which required reasonable skill and care) and “service life” (an absolute  requirement) compatible?

There is limited case law on the issue but having reviewed largely  Canadian authorities the judge found that an absolute warranty can  trump a general obligation to comply with the specification. Given  the fitness for purpose obligations in the contract, MTH had therefore  assumed an absolute obligation to design and construct the works to  achieve a minimum service life of twenty years. The grouted connections  had plainly failed to achieve such a purpose.

The judge also pointed out that it was not uncommon for construction  contracts to contain obligations both to exercise reasonable skill and  care (or to do the work in a workmanlike manner) and to achieve a  particular result. These were not incompatible. He gave the example of  a brick building with a particular design life that was an eyesore because  different types of brick had been used in its construction. The bricks  may be sufficiently robust individually and collectively to satisfy the design  life but the works would fail the workmanship test due to their poor  appearance.

The judge added that he could understand why an employer would want  a design life (in accordance with the applicable DNV standard) but it was  also open for him to stipulate a particular service life. This would usually  come at a price as the contractor would have to consider what additional  measures he should take to reduce the potential for failure within the  service life.

Put simply the judge said that MTH was obliged to (i) exercise reasonable  skill and care in preparing the design; (ii) comply with the DNV standard;  and (iii) to meet the service life period. MTH complied with the first two  obligations but that didn’t matter because it failed to comply with the  separate, absolute, obligation to meet the service life requirement.

At first the decision may seem unfair on MTH. The failure for which it  has been found liable is based in part on its reliance on an international  standard which it could not possibly have known was defective when  it was undertaking the works. But it is clear from the judgment that the  judge simply followed the terms of the contract that MTH had agreed to.

The decision does not establish any new law but does serve as a  reminder to contracting parties to exercise care when negotiating  and agreeing terms. It confirms that if a contractor accepts separate  design obligations to exercise skill and care and to achieve a specific  performance standard, compliance with the obligation to exercise  reasonable skill and care will not be a defence to a claim arising from a  failure to meet the specified performance standard, even if the cause is a  defect in an industry recognised design detail.