The failure of the foundations of an offshore wind farm have highlighted the importance of clear drafting of warranty provisions in construction contacts. Energy giant E.ON and contractor MT Hojgaard went to court to decide who was responsible for the €26.25m cost of remedial work to the foundations. The case centred on whether MT Hojgaard had given and breached a warranty that the foundations would last for 20 years.
MT Hojgaard was appointed to design and build the Robin Rigg Offshore Wind Farm in the Solway Firth. During construction it became clear that the foundations for the wind turbines would fail. E.ON and MT Hojgaard worked together to resolve the problem. E.ON then brought proceedings against MT Hojgaard to decide which party was responsible for the cost of the works.
The case was heard in the Technology and Construction Court (TCC). The court concluded that the foundations were not fit for purpose and that MT Hojgaard was liable for breach of contract. The TCC based its decision on the wording of clauses which said that the foundations should ‘ensure a lifetime of 20 years’.
MT Hojgaard appealed on the grounds that the judge had misinterpreted the meaning of the clauses. The Court of Appeal agreed, pointing to a conflict between the wording in the contract and the technical requirements. The contract stated that the foundations should last ‘a lifetime of 20 years’, whereas the technical requirements referred to a ‘design life of 20 years’. The Appeal Court held that a ‘design life’ of 20 years indicated that the foundations were expected to function for 20 years but that this was not inevitable or guaranteed. As a result, the Court decided that MT Hojgaard was not liable for the costs of the remedial work.
“Construction professionals need to pay careful attention to the wording of obligations in their contracts,” said James Burgoyne, Director – Claims & Technical, Brunel Professional Risks. “By making sure that all the clauses are clearly written and understood by both parties they will avoid the risk of future dispute. In particular, this case shows the importance of ensuring that terminology is used consistently across all contact documents – whether from the perspective of creating enforceable warranties, or avoiding them.”
Full details of the MT Hojgaard case have been reported by law firms Osborne Clarke and Ince & Co and by Building.co.uk.