Communique September 2017

Understanding Design Obligations: The Contractor’s Duties

The Case

On the 3rd August, 2017, the UK Supreme Court delivered its judgment in MT Højgaard v E.ON Climate & Renewables UK Robin Rigg East Ltd [2017] UKSC 59. The case involved a design and build contract for the construction of wind farms. At issue is the balance of “design” responsibility: designer .v. builder.The contract terms incorporated the following:

• the contractor was to undertake the detailed design
• the detailed design was to be in accordance with the employer’s technical requirements
• the completed project was required to achieve a specified lifespan.

The foundations failed. On investigation, it was found that if the contractor’s design had followed the employer’s technical requirements, the specified lifespan would not have been achievable.The court said: ‘Where two provisions … impose different or inconsistent standards or requirements, rather than concluding that they are inconsistent, the correct analysis … is that the more rigorous or demanding of the two standards or requirements must prevail, as the less rigorous can properly be treated as a minimum requirement. Further, if there is an inconsistency between a design requirement and the required criteria, it appears to me that … although [the contractor] may have complied with the design requirement, [the contractor] would be liable for the failure to comply with the required criteria, as it was [the contractor’s] duty to identify the need to improve on the design accordingly.’

Discussion

In this case, the project was a true “design-build” on the basis of minima set by the principal. But an architectural design will always to some extent be an indication of “intent” rather than finite detail: this case will be relevant where a building contractor’s defence relies on inadequate design documentation. It reinforces the point that a builder is still expected to apply common sense and reasonable competence, and to raise a query with the designer where aspects of the design appear defective or at odds with compliance documents or good practice:

• Where an item of construction – not specifically detailed - is subject to building code compliance, construction not meeting that minimum performance level would be defective.
• In past times contractors were expected to know how to build things, and TA’s applied “common sense” in processing consents, but the current de-facto documentation standard is approaching the level of shop drawings. (BA04 s49(1) = “satisfied on reasonable grounds”; but BA04 s40(1) =“must not carry out any building work except in accordance with a building consent”)
• NZBC Acceptable Solutions are treated as gospel and applied slavishly by TA’s and various so-called 'experts', regardless whether they are appropriate in the circumstances.
• Contractors and/or tradies are quick to point out apparent shortcomings in documentation, often where normal competence expectations make detailed information superfluous.
• Where, for various reasons, clients (especially government bodies) feel a higher level of compliance is necessary, is that now deemed to be the new benchmark for 'good practice’?
• Evidence supporting claims routinely relies on applying 'current' levels of expectation or technical standards to historical cases. What are we doing now which might later be deemed inadequate?