28 September 2020
Under Construction - Q3 2020 – 5 of 5 Insights
Construction contracts often make reference to the works achieving a certain design life. This issue was considered in the Supreme Court in 2017 MT Hojgaard v E.ON , and a recent TCC decision, Blackpool Borough Council v Volkerfitzpatrick provides helpful guidance on design life, specifically obligations in the context of different components of structure. The case also provides helpful guidance on the need to distinguish between routine maintenance and major repairs.
The Blackpool case concerned the upgrade of the Blackpool tram system, including the construction of a new tram depot. The depot is located about 40 metres from the coastline and consists of steel frames protected by a galvanised coating. The depot was procured by a modified NEC3 design and build contract between the Council and Volkerfitzpatrick and completed in 2011.
In 2015, the Council discovered defects in the steel components in the roof, and the Council brought proceedings alleging that the depot did not meet the intended design life of 50 years, claiming substantial damages as a consequence. Volkerfitzpatrick disputed the claim, arguing that the Council had failed to carry out necessary maintenance work. Without going into the detail of the case, there were two aspects of particular interest.
It was apparent from the Works Information, which formed part of the contract, that the design life should be at least 20 years unless otherwise specified in the Functional Procurement Specification.
The Functional Performance Specification required that the “building structure” should achieve a 50-year design life. There was no reference in these documents to whether the roof structure formed part of the building structure. The meaning of the term "building structure" was therefore hotly disputed between the parties.
The court took into consideration a technical document, the RPS Design Log, which was submitted as part of Volkerfitzpatrick's tender and became a contract document. This specified a design life of 25 years for the "external shell" as distinct from the "structural frame" where a 50-year design life would apply. The court was satisfied that the RPS Design Log suggested that the roof components were not part of building structure, and that therefore there was in fact no conflict between the Works Information and the Functional Performance Specification. This meant that the roof components were to have a design life, not of 50 years, but of 25 years.
Whilst this is an issue that was specific to the case, it emphasises the importance of ensuring consistency and clarity throughout the myriad of documents which form the contract.
There was no contractual meaning as to the term "design life".
The court referred to two British Standards for guidance and anaylsis, before commenting that "It cannot realistically be thought that a structure should be intended to be maintenance free for the whole of its design life, whereas it can reasonably be assumed that it ought not to need major repairs over that period".
The key point was that a distinction needed to be made between anticipated maintenance and major repair, which would be a question of fact and degree in each case. In the Blackpool case anticipated maintenance was limited to maintenance which was not unusually onerous when considering works of a similar character.
The case provides a useful reminder of the need for parties to define the contractual design requirements clearly to ensure consistency across the legal and technical elements of a contract. The case also suggests that when a court is considering the meaning of design life it will consider a distinction between major repair and routine maintenance unless there are clear contractual words to the contrary.
28 September 2020
28 September 2020