An important aspect of structures that are built for offshore use and in difficult environments is their expected service life. Because it is difficult to carry out maintenance and repairs at sea, a design life is usually specified in design and construction contracts. In Blackpool Borough Council v Volkerfitzpatrick Ltd and others1, the High Court examined how English courts 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, groundbreaking tram depot on Blackpool’s promenade near the Irish Sea. The depot was put into operation in spring 2012.

In early 2015, strong winds peeled off much of the roof, and during the resulting inspections, the council learned of various problems, including early corrosion in the roof space and signs of cladding panel failure. The contractor proposed corrective action to address the issues that were not accepted by the Council.

The council opened proceedings against the contractor alleging that the contractor had undertaken significant refurbishment work worth more than £ 6 million. The council claimed that the planning and construction of substantial parts of the tram depot did not reach the planned service life of 50 years and were not suitable for the exposed location on the coast. The contractor denied the alleged design lifespan, as the contract provided for different “design lifetimes” and the parts of the work did not reach their specified lifespan or were otherwise unsuitable.

In the Technology and Construction Court’s judgment, the Council won its action but received only £ 1.11 million, a small percentage of the amount requested.

Requirement for the design service life

The court found that the intended useful life was 25 years, rather than 50 years as claimed by the council. In reaching this conclusion, the judge discussed the importance and scope of the contractual “lifetime” requirement, including the applicable due diligence and maintenance obligations of the contractor. This included analyzing the key contractual obligations related to minimum life, suitability and maintenance, all of which related to the design obligation.

Adequate standard of care and Hojgaard case

The council argued that strict contractual obligations were imposed on the contractor, including a minimum useful life obligation. The contractor asserted that it was a matter of reasonable due diligence.

Both parties relied on the decision of the Supreme Court in the case of MT Hojgaard v E.ON 2, in which the contractor applied the necessary care and professional competence to foundations for offshore wind turbines in compliance with good industrial practice and the applicable DNV standard for the Design of offshore wind turbines had built turbines and potting compounds. An error contained in the standard, however, meant that the foundations would not survive the required useful life of 20 years, whereby the contractor would violate the usability obligation.

The judge, while admitting that the Supreme Court decision affected the terms of that contract, noted that it contained “insightful remarks about the amount of design life in a contract”. He summarized the observations of the court in Hojgaard with regard to the design life as follows: (a) the foundations were designed for a life of 20 years and no absolute guarantee of an unreplaceable life of 20 years; (b) in practice, the lifetime of any given period could never be guaranteed; and (c) if the contract were for a interpretative standard, it could have a specific meaning in relation to the annual probability of default.

Against this background, the court found that the suitability and service life obligations were not to be understood as a mere “reasonable duty of care”, but had a “strict character”. However, the judge also accepted that Hojgaard’s motion would have enabled the contractor to argue that “a certain element of the tram depot, despite a possibly adopted design, would not outlast its minimum lifespan,” but as in Hojgaard, this was not an issue had to be decided by the court.

Need for a contract definition

The court felt it was important to understand what is meant by “Design Life”. Although two different life expectancies were given, the design life was not defined in the contract so that the court had to refer to the relevant industry standards then in force, one was used to emphasize that the definitions of ‘design life’, ‘useful life’, ‘performance ‘and’ Durability ‘are useful to illustrate the interplay between these points and another to highlight the definitions of’ Shaping Working Life ‘and’ Maintenance ‘.

Anticipated maintenance vs. major repairs

In the second standard, the “design useful life” was defined as the “assumed period of time for which the structure or part of it could be used for its intended purpose with expected maintenance, but without major repairs being required”, and maintenance as the “sentence “The activities carried out during the service life of the structure in order to be able to meet the reliability requirements”.

With these facts in mind, the judge found it unrealistic to assume that a structure should be maintenance-free for its entire design life, but it was reasonable to assume that no major repairs would be required during this period. This 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-standard’ or not ‘unusually onerous’ with regard to normal construction operations and the maintenance requirements that apply to work of a similar nature”.

graduation

The Blackpool case provides useful guidance on how to dimension a design life, including how it interacts with any associated maintenance obligations. It also shows that, as a matter of best design practice, a contract should include a definition of design life and ensure that the contract addresses issues such as life, performance, durability and maintenance. It should also be clearly and unequivocally worded that obligations as a whole – and in particular organizational obligations – are only limited to a reasonable standard of care and do not constitute a strict obligation if this is intended by the parties.

Footnotes

1. [2020] EWHC 1523 (TCC)

2. [2017] UKSC 59

The content of this article is intended to provide general guidance on the subject. Expert advice should be sought regarding your specific circumstances.