The UK Supreme Court has ruled against MT Højgaard (MTH) in the Robin Rigg offshore wind farm dispute and in favour of E.ON Climate and Renewables.
This appeal arose from the fact that the foundation structures at the Robin Rigg wind farm in the Solway Firth, which were designed and installed by MTH, failed shortly after completion of the project.
The dispute concerned who bears the remedial costs in the sum of EUR 26.25m.
In November 2015, the UK Supreme Court approved E.ON’s application to appeal against a ruling in favour of MTH from April 2015 regarding the Robin Rigg dispute.
The Supreme Court has now unanimously allowed E.ON’s appeal and has found MTH to be liable to cover the remedial costs.
The Supreme Court considered whether the contract for the design and installation of foundations for the offshore wind farm imposed a fitness for purpose obligation on the contractor amounting to a warranty that said foundations would have a service life of 20 years.
In their reasons for the judgement, the Supreme Court Justices stated the following:
The central issue in this appeal is whether para 126.96.36.199 (and para 3b.5.1) of the Technical Requirements was infringed [27, 33]. The second limb of para 188.8.131.52 reads: “The design of the foundations shall ensure a lifetime of twenty years in every aspect without planned replacement.” Taking into account other aspects of the Technical Requirements, this can be read in two ways: either as a warranty that the foundations will actually have a lifetime for twenty years, or as an undertaking to provide a design that can objectively be expected to have a lifetime of twenty years. Although there is some force in the latter argument, especially in the contract’s (exclusive) remedies regime [27-32], the question does not warrant an answer in this appeal. The foundations neither had a lifetime of twenty years, nor was their design fit to ensure one [24-32]. Therefore, the effect of para 184.108.40.206 according to its terms would be to render MTH liable.
On 20 December 2006, E.ON and MTH signed a contract for the design, fabrication and installation of the foundations for the wind turbines at Robin Rigg, after E.ON accepted the tender the company submitted in July of that year. In November 2006, MTH and Rambøll submitted a detailed Foundation Design Basis document, since Rambøll was hired by MTH to carry out the design work on the project.
Fom 2007 to 2009, MTH designed, fabricated and installed the foundations that shortly after the completion of the installation started showing weaknesses in the grouted connections as a result of errors in the then applicable international standard issued by DNV, known as J101.
DNV discovered that there was an error in the value in a specific parametric equation, which was wrong by a factor of about 10, meaning that the axial capacity of the grouted connections at Horns Rev 1, Egmond aan Zee, Robin Rigg and certain other wind farms had been substantially over-estimated, according to a court document.
DNV sent a letter to MTH and others in the industry on 28 September 2009, alerting them to the situation and subsequently revising J101 to correct the error.
The grouted connections at Robin Rigg started to fail in April 2010 with the transition pieces starting to slip down the monopiles.
In 2012, MTH applied for declarations as to the cost of the remedial works and who should bear that cost, claiming it had exercised reasonable skill and care and complied with all its contractual obligations, and should thus have no liability for the cost.
In the amended defence and counterclaim, E.ON claimed there were numerous breaches of contract by MTH and counterclaimed for declarations to the effect that MTH was liable for the defective grouted connections.
The legal action came before a judge in November 2013. In April 2014, the first ruling went against MTH, but the company filed an appeal, and the Court of Appeal reversed the ruling in favour of MTH in April 2015. The court upheld MTH’s appeal on the basis that the contract only required that the foundations should have a “design life” of 20 years, meaning that they would probably, but not necessarily, function for 20 years.
E.ON appealed this decision from 2015 before the Supreme Court, claiming that the contract imposed a fitness for purpose obligation on MTH amounting to a warranty that said foundations would have a service life of 20 years.
The court(s) found Rambøll not negligent in its design of the grouted connections, explaining that it was reasonable to comply with the provisions of the J101 standard and to adopt the stated value for the parametric equation.