Thu, 17 August, 2017
MT Hojgaard AS v E.ON Climate and Renewables UK Robin Rigg East Ltd  UKSC 59
This case should be required reading for those in the offshore infrastructure and ship-building industries and sets out the modern approach to conflicting design and performance obligations under infrastructure contracts and who bears the risk when compliance with design does not result in contractual performance.
The issue before the Supreme Court was whether a designer and manufacturer (MTH) of the foundation structures of two offshore wind farms at Robin Rigg in the Solway Firth were in breach of contract. The structures failed shortly after their installation.
The problem arose because under the contract MTH was required to design and install foundations which both (a) complied with a particular design principle (called “J101”) and which also (b) “ensure[d] a lifetime of 20 years”.
MTH produced the foundations in accordance with the required design principle but within 2 years the foundations failed. This was because the design principle (J101) contained a mathematical error such that compliance with the design standard could not give a lifetime of 20 years.
This was not the first time that the English Courts have been called on to consider a contract which includes two terms, one requiring the contractor to provide an article which is produced in accordance with a specified design, the other requiring the article to satisfy specified performance criteria; and where those criteria cannot be achieved by complying with the design. However it is the most complete examination of the issue by the Supreme Court to date.
The Supreme Court decided that MTH were liable for the costs associated with the failure of the foundations on the basis that:-
The trenchant comments of the UK Supreme Court ought to be a warning to manufacturers working to design principles that they need to both adopt more careful drafting of their guarantees of performance limiting these where necessary and to check that compliance with design requirements will in fact give the desired performance before signing contracts.
Jonathan has a broad practice covering all aspects of commercial and transport law. He is consistently ranked by Chambers UK and Legal 500 as a Leading Senior Junior with Chambers UK (2016) commenting that he is “Noted by peers for his meticulous preparation, strong advocacy skills and easy manner with clients” and Legal 500 (2016) describing him as “Very well prepared”.
Jonathan has a strong international practice and he is qualified to practise in England & Wales, Northern Ireland (practising) and Australia (currently non-practising). He has also advised on disputes involving Australia, Canada, the Channel Islands, Hong Kong, Northern Ireland, Scotland, Singapore, and the United States of America.