Fit for Purpose v Faulty Design Specifications
Who pays for remedial costs under a JCT Design and Build Contract when there has been no negligence on either side? Susan Wells considers a recent decision of the Supreme Court.
What happens when a building contractor exercises reasonable skill, care, and diligence in the performance of its duties under the building contract but, despite this, the works are not fit for purpose?
This question was recently looked at by the Supreme Court in MT Højgaard A/S v E.ON Climate and Renewables UK Robin Rigg West Ltd  UKSC 59.
MT Højgaard A/S (MTH), as contractor, entered into a ‘design and build’ contract (the Contract) with E.ON Climate and Renewables UK Robin Rigg West Ltd (E.ON), as the employer, for the design, fabrication, and installation of the foundations of 60 wind turbine generators for the Robin Rigg offshore wind farm in the Solway Firth. The advantage of this quite recent form of electricity generation is that stronger winds are available at sea.
E.ON required the design of the foundations to be fit for purpose and prepared in accordance with a document known as J101, which was a reference to an international standard for the design of offshore wind turbines published by a Norwegian classification and certification agency.
In constructing the foundations to the wind turbines, MTH would be responsible for engineering the grouted connection between the monopile foundation and the towers of the wind turbines.
Soon after MTH completed the Works, it came to light that J101 contained a significant error (affecting the calculation of the axial capacity of the grouted connections), which led to the connections starting to fail shortly after the completion of the Works.
The parties agreed that E.ON would develop a scheme of remedial works, which amounted to €26.25m. The court was asked to decide which party should pay the costs of the remedial works when there had been no negligence or lack of professional skill on either side.
After looking at the many detailed provisions in the contract, the Supreme Court decided that if the employer has specified or approved the design, it is the contractor who can be expected to take the risk if it has agreed to work to a design which would render the works incapable of meeting the criteria it has agreed to. The contractor only has itself to blame if it does not check the practicality of the design and the design turns out to be defective.
While this may seem harsh from the contractor’s perspective the practical effect is likely to be that, in future, many contractors will seek an amendment to the building contract to the effect that the contractor does not warrant that the project works will be fit for purpose if it is required to adhere to a specified design which has been prescribed and approved by the employer.