Fitness for purpose obligations against skill and care

MT Hojgaard –v- EON Climate & Renewables [2014] BLR450, TCC

Facts

EON was building a wind farm in the Solway Firth and gave the design, fabrication and installation contract to MT Hojgaard (MTH).  The contract required MTH to act with due care and diligence “so that the works when completed complied with the requirements of the agreement”.  The agreement requirements were that the design of the structures should ensure a life time of 20 years in every respect and the choice of structure, materials, corrosion, protection, and inspection should be all be made to that end.

Unfortunately the grouted connections which formed the join between the monopole driven into the seabed and the transition piece to which the generator tower was connected, began to move, requiring a remedial scheme of some €26 million.  MTH sought a declaration that the defect was not its fault.

Held

1. The movement in the grouted connection was down to an error by MTH.
2. MTH had taken on a duty of “due care and diligence” which was equivalent to the common law duty of skill and care.
3. Nevertheless it had also agreed that its works when completed would comply with the requirements of the agreement including a duty to ensure a life time of 20 years.  This was a duty of strict liability which trumped the reference to skill and care.  MTH was liable.

Commentary

There is a constant tension in contracts for design (both professional consultants and also design & build contractors) between the employer’s wish for certainty and strict liability; and the designer’s need to limit his commitment to the traditional professional standard of skill and care (which normally is all that is covered by professional indemnity insurance).  Often a compromise is reached between the lawyers representing the two parties with a formula expressing a duty to use skill and care so that the designer ensures a certain outcome.  This is usually left deliberately ambiguous.  This case makes it clear that that ambiguity will be resolved in favour of the employer.  Any draftsman trying to devise a provision to protect the professional or a design build contractor will have to use clearer words to impose an over-ruling performance criterion by reference to skill and care.

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