MT Højgaard A/S (Appellant/Claimant) v E.on Climate and Renewables UK Robin Rigg East Ltd and Another (Respondents/Defendants)
| Jurisdiction | England & Wales |
| Judge | Lord Justice Jackson,Lord Justice Underhill,Lord Justice Patten |
| Judgment Date | 30 April 2015 |
| Neutral Citation | [2015] EWCA Civ 407 |
| Docket Number | Case No: A1/2014/2078 |
| Court | Court of Appeal (Civil Division) |
| Date | 30 April 2015 |
[2015] EWCA Civ 407
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
THE QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
THE HONOURABLE MR JUSTICE EDWARDS-STUART
HT-12148
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice Jackson
Lord Justice Patten
and
Lord Justice Underhill
Case No: A1/2014/2078
Mr David Streatfeild-James QC and Mr Mark Chennells (instructed by Fenwick Elliott LLP) for the Appellant/Claimant
Mr John Marrin QC and Mr Paul Buckingham (instructed by Wragge Lawrence Graham & Co) for the Respondents/Defendants
Hearing dates: 10 th and 11 th February 2015
This judgment is in eight parts, namely:
| Part 1. Introduction | Paragraphs 2 to 7 |
| Part 2. The facts (i) Background (ii) International Standard J101 | Paragraphs 8 to 54 |
| Part 3. The present proceedings | Paragraphs 55 to 65 |
| Part 4. The appeal to the Court of Appeal | Paragraphs 66 to 70 |
| Part 5. The legal principles | Paragraphs 71 to 88 |
| Part 6. Decision on MTH's appeal | Paragraphs 89 to 107 |
| Part 7. Decision on E.ON's cross-appeal (i) TR paragraph 10.5.1 (ii) J101 section 9 paragraph D101 | Paragraphs 108 to 137 |
| Part 8. Executive summary and conclusion | Paragraphs 138 to 143 |
This is an appeal by a contractor against a finding that it warranted that the foundation structures which it designed and installed for an offshore wind farm would have a service life of 20 years. Those foundations failed shortly after completion. So if there was such a warranty, the contractor was in breach of it. There is a cross-appeal by the employer against a finding that there were no other breaches of contract by the contractor. The principal issue of law which arises is how the court should construe the somewhat diffuse documents which constituted, or were incorporated into, the 'design and build' contract in this case.
I shall now identify the principal protagonists in the litigation:
• The contractor is MT Højgaard A/S, to which I shall refer as "MTH".
• The employer under the contract is E.ON UK Solway Offshore Limited and E.ON UK Offshore Energy Resources Limited. Those two companies have now changed their names to E.ON Climate and Renewables UK Robin Rigg East Limited and E.ON Climate and Renewables UK Robin Rigg West Limited. I shall refer to those two companies collectively as "E.ON".
• Rambøll Danmark A/S ("Rambøll") is a company which MTH engaged to carry out design work on the project.
• Offshore Design Engineering Limited ("ODE") is a company which E.ON engaged to act as Engineer's Representative on the project.
• Det Norske Veritas ("DNV") is an independent classification and certification agency. DNV is based in Norway.
In this judgment I shall use the abbreviation "TCC" for Technology and Construction Court. I shall use the term "turbine" to mean a wind turbine generator. In an offshore location the turbine stands on a single pile, known as a "monopile", which is driven into the sea bed.
The foundations of the turbines in this case comprise two elements, namely the monopile and the transition piece. I shall explain the function of the transition piece in Part 2 below.
In the context of this case "axial load" means the downward load imposed by the turbine and the transition piece. "Axial capacity" means the capacity to resist axial load. I shall use the abbreviation "ULS" for ultimate limit state. That means the limit of load carrying capacity.
After these introductory remarks, I must now return to the facts.
(i) Background
An offshore wind farm is a cluster of turbines standing on monopiles driven into the sea bed. This is a relatively new form of electricity generation. The advantages are that stronger winds are available at sea. Also there is less opposition to the structures from land owners and others. On the other hand it is more expensive to construct turbines offshore than on land. Also the technology presents some challenges.
One of those challenges is how to connect the bottom of the turbine tower to the top of the monopile. One form of connection is illustrated in the plan appended to this judgment. A steel cylinder, known as a transition piece, is fitted over the top of the monopile. The gap between the transition piece and the pile is filled with grout. The transition piece projects above the top of the pile. The tower which supports the electricity generator fits onto the transition piece. The grouted connection works by friction between the grout and the two steel surfaces between which it sits.
The first offshore wind farm which had this form of grouted connection was built in about 2002. It is known as Horns Rev 1 and stands off the coast of Denmark.
One issue which arises concerning grouted connections for wind turbines is whether to insert shear keys. These are small horizontal projections from the outside surface of the pile and the inside surface of the transition piece. They usually take the form of weld beads. Shear keys project into the grout and thus increase the interface shear strength of the grouted connection. There is, however, a risk. Stress lines passing between the outer and inner shear keys might cause failure of the grout.
At around the turn of the century the University of Aalborg carried out tests on grouted connections with and without shear keys. Those tests were concerned to simulate the overturning moment imposed by wind and waves. These forces would be much more powerful in the case of wind turbines than in the case of conventional offshore structures such as oil rigs. The conclusion drawn from the Aalborg tests was that shear keys were not necessary. The Aalborg team did not, however, test the axial capacity of grouted connections. This was probably because they assumed that the axial capacity of such connections was sufficient.
Following the Aalborg tests, Horns Rev 1 was built without shear keys in the grouted connections. Five other offshore wind farms were built without shear keys over the next few years. This approach was not, however, universal. Two offshore wind farms were built with shear keys in the grouted connections. These were at Barrow and Arklow Bank.
(ii) International standard J101
In June 2004 DNV published an international standard for the design of offshore wind turbines, entitled "DNV-OS-J101". It is generally referred to as "J101".
Section 1 of J101 sets out its objectives as follows:
" A200 Objectives
201 The standard specifies general principles and guidelines for the structural design of offshore wind turbine structures.
202 The objectives of this standard are to:
—provide an internationally acceptable level of safety by defining minimum requirements for structures and structural components (in combination with referenced standards, recommended practices, guidelines, etc.)
—serve as a contractual reference document between suppliers and purchasers related to design, construction, installation and in-service inspection
—serve as a guideline for designers, suppliers, purchasers and regulators
—specify procedures and requirements for offshore structures subject to DNV certification
—serve as a basis for verification of offshore wind turbine structures for which DNV is contracted to perform the verification."
Paragraph 501 of section 1 states:
"The aim of a project certification of an offshore wind farm is to assure an acceptable quality of the wind farm project. This is achieved by measuring the wind farm project against agreed standards and project specifications and by verifying that the project complies with these standards and specifications. The project certification is carried out by a third-party certification body. The successful project certification results in the issue of a project certification, which allows owners, investors, insurance companies, authorities and other interested parties to place confidence in the project and trust that the project meets the agreed standards and specifications."
Section 2 of J101 sets out the design principles. The approach is probabilistic, namely to achieve a very high likelihood of stability. The annual probability of failure is to be in the range of 10– 5–10– 4. Section 2 does not say that the risk of failure must be non-existent, since that is impossible.
Section 2 specifies four methods of design of which the second is:
"101
…
- design by partial safety factor method with direct simulation of combined load effect of simultaneous load processes."
This method is sometimes referred to as "integrated analysis" and is explained in section F.
Paragraph F301 provides:
" Characteristic load effect
301 The characteristic combined load effect Sk may be established directly from the distribution of the annual maximum combined load effect that results from a structural analysis, which is based on simultaneous application of the two or more load processes. In the case of ULS design, the characteristic combined load effect Sk shall be taken as the 98% quantile in the distribution of the annual maximum combined load effect, i.e. the combined load effect whose return period is 50 years."
In other words the risk of the characteristic combined load effect, which is to be used in design, being exceeded in practice in any given year is 2%: see table B2 in section 4.
Section 7 of J101 deals with the design of steel structures. Paragraph K104 of...
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