In The Steel Company of Canada Ltd v Willand Management Ltd  the Supreme Court of Canada held that when:
– a contractor expressly undertakes to carry out work which will perform a certain function in conformity with particular plans and specifications and
– it turns out that the work so constructed will not perform the function
the express obligation to construct work capable of carrying out the relevant function overrides the obligation to comply with plans and specifications.
So, the contractor’s payment claim failed even though it had carried the work out in accordance with plans and specifications provided by the employer which turned out to be defective.
In MT Højgaard A/s v E.ON Climate And Renewables & Ors , in 2006 the Claimant contractor, MT Højgaard a/s (“MTH”) entered into an agreement with the Defendant employers, E.ON Climate and Renewables UK Robin Rigg East Ltd and E.ON Climate and Renewables UK Robin Rigg West Ltd (“E.ON”) for the design, fabrication and installation of the foundations for 60 wind turbine generators (“the turbines”) for the Robin Rigg offshore wind farm in the Solway Firth.
Section 3.2.2, General Design Conditions in the construction contract, contained the following provisions:
“18.104.22.168 Detailed Design Stage
The detailed design of the foundation structures shall be according to the method of design by direct simulation of the combined load effect of simultaneous load processes (ref: DNV-OS-J101). Such a method is referred to throughout this document as an ‘integrated analysis’
The design of the foundations shall ensure a lifetime of 20 years in every aspect without planned replacement.”
In 2004 an independent classification and certification agency called Det Norske Veritas (“DNV”), had produced DNV-OS-J101 (“J101”) as an international standard for the design of offshore wind turbines and grouted connections in particular. However, the value attributed to a variable used in one of the standard’s equations was underestimated by a factor of about 10.
MTH’s designer, Rambøll Danmark A/S (“Rambøll”), like everyone else at the time, did not know of this error when it carried out the design.
In 2009 it was discovered that movement was taking place in grouted connections which had been designed using the standard. It was then that the mistake in the standard’s equation was exposed.
Following the Canadian case discussed above, the Court of Appeal concluded that the words of clause 22.214.171.124 were clear and were not inconsistent with the other terms of the contract or the intentions of the parties as reflected in the rest of the contract.
MTH had assumed full responsibility for design as stated in section 3.1, subject only to a qualification about the life of the coating.
MTH had warranted that the foundations would have a service life of 20 years and E.ON was entitled to rely on that warranty notwithstanding that other parts of the contract had required MTH to design the grouted connections in accordance with J101. Since those connections had failed within 2-3 years, MTH had breached that obligation.
This blog has been posted out of general interest. It does not remove the need to get bespoke legal advice in individual cases.