Constructing for Life: The Courtroom Method to “Design Life” in Development Contracts

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An important consideration for structures built for use offshore and in challenging environments is their expected lifespan. Because maintenance and repairs are difficult to do offshore, construction and construction contracts usually specify a lifespan. In Blackpool Borough Council’s ruling v Volkerfitzpatrick Ltd and others1, the High Court re-examined how English courts will interpret a design life requirement in a building contract.

Facts

In 2009, the Blackpool Borough Council (“the Council”) hired Volkerfitzpatrick (“the Contractor”) to design and build a new, landmark tram depot on Blackpool Promenade beside the Irish Sea. The depot was put into operation in spring 2012.

In early 2015, high winds peeled off much of the roof, and from the resulting inspections, the council learned of various problems, including early corrosion in the roof space and signs of cladding panel failure. The contractor put forward remedial actions to address the issues that were not accepted by the Council.

The Council opened legal proceedings against the contractor claiming the contractor needed to take significant remedial action costing more than £ 6 million. The council claimed that the planning and construction of substantial parts of the tram depot did not meet the intended lifespan of 50 years and were not suitable for the exposed coastal location. The contractor contested the alleged design lifespan requirement as the contract stipulated different “design lifetimes” and parts of the work did not meet the specified lifespan or were otherwise unsuitable.

The Technology and Construction Court ruled that the council was successful in its lawsuit but received only £ 1.11 million, a small percentage of the amount requested.

Design life

The court found that the intended lifespan of the design was 25 years, rather than 50 years as claimed by the council. To arrive at this conclusion, the judge discussed the importance and scope of the contractual lifetime requirements, including the applicable due diligence and maintenance obligations of the contractor. This included analyzing key contractual obligations for minimum life, suitability and maintenance, all of which were related to the design obligation.

Adequate standard of care and Hojgaard case

The council argued that strict contractual obligations were imposed on the contractor, and this included a minimum commitment for the life of the design. The contractor asserted that these were appropriate duties of care.

Both parties relied on the decision of the Supreme Court in the MT Hojgaard v E.ON 2 case, in which the contractor used due care and expertise to build foundations for offshore wind turbines in compliance with good industrial practice and the applicable DNV standard for the design of Offshore wind turbines had turbines and grouted connections erected. However, an error contained in the standard meant that the foundations did not have the required service life of 20 years, whereby the contractor violated an obligation of usability.

While the judge acknowledged that the Supreme Court decision changed the terms of that contract, the judge found that it provided “insightful observations on the scope of a life-style obligation in a contract.” He summarized the observations of the Hojgaard court with regard to the obligation to last the design as follows: (a) The foundations were designed for a life of 20 years and were not an absolute guarantee of a life of 20 years without replacement. (b) in practice a lifetime of a given period could never be guaranteed; and (c) had the contract provided for a draft standard it could have a specific meaning in relation to the annual probability of default.

In view of this, the court ruled that the suitability and design life obligations were not to be understood as a mere “due diligence”, but were “strict in nature”. However, the judge also accepted that the application of Hojgaard would have enabled the contractor to argue that “a certain element of the tram depot, despite a design that might have been adopted, does not have its minimum lifespan,” but as in Hojgaard it was not Question that had to be decided by the court.

Need for a contractual definition

The court found it important to understand what is meant by “design life”. Although two different life expectancies were stated, the life expectancy was not specified in the contract, so the court had to refer to the industry standards in force at the time. One was used to emphasize that the definitions of ‘lifespan’, ‘lifespan’ ‘,’ performance ‘and’ durability ‘are useful to illustrate how these elements work together and another to clarify the definitions of’ design ‘. Lifetime ‘and’ Maintenance ‘.

Anticipated Maintenance v Major Repair

In the second standard, “design life” was defined as the “assumed period of time that the structure or part of it is to be used for the intended purpose with anticipated maintenance without the need for major repairs” and maintenance as the “set” of Activities carried out during the life of the structure to meet reliability requirements. “

In view of this, the judge found that it was not realistic to assume that a structure should be maintenance-free throughout its life, but that it was to be assumed that no major repairs would be required during this period. That would be a matter of fact and degree in the context of the individual case. Here the court concluded that acceptable maintenance “is limited to maintenance that is not” non-standardized “or” unusually burdensome “, taking into account normal construction operations and the maintenance requirements that apply to similar work”.

Conclusion

The Blackpool case provides useful guidance on how to interpret a lifetime requirement, including how it interacts with any maintenance obligations that may be off the mark. It also shows that, for best design practice, a contract should include a definition of the life of the design and ensure that the contract covers issues such as life, performance, durability and maintenance. It should also contain a clear and unambiguous formulation in which the obligations as a whole – and in particular the design obligations – are limited only to a reasonable standard of care and do not constitute a strict obligation if so intended by the parties.