August 3, 2017

Fenwick Elliott respond to Supreme Court decision in MT Højgaard A/S v. E.ON Climate and Renewables UK Robin Rigg East Limited and anor

The Supreme Court has today issued its judgment in MT Højgaard A/S v. E.ON Climate and Renewables UK Robin Rigg East Limited and anor, reversing the unanimous decision of the Court of Appeal and restoring the decision of the High Court, finding MT Højgaard A/S (MTH) responsible for the cost of repairing the grouted connections at the Robin Rigg offshore windfarms.

Between 2007 and 2009 MTH undertook the design, manufacture and installation of the foundations for the Robin Rigg offshore wind farms. Following completion and commissioning of the works, it was discovered that due to an error in the international standard used in the design, the load-bearing capacity of the grouted connections in the foundations had been substantially over-estimated. MTH and E.ON disputed who was responsible for the cost of the remedial works necessary to be carried out to the foundations.

At first instance, the trial judge rejected the suggestion that MTH had been negligent and also rejected a number of allegations of breach of contract made by E.ON. However, the trial judge found that MTH was responsible, primarily on the ground that the contract provided for MTH to warrant the life of the foundations at Robin Rigg for 20 years. This finding was overturned by the Court of Appeal in April 2015 and E.ON subsequently appealed to the Supreme Court.

In finding against MTH, the Supreme Court has held that the relevant provisions of the contract and specification effectively did impose such a warranty on MTH. In its analysis the Supreme Court rejected the reasoning of the Court of Appeal concerning the inconsistency of the provisions of the relevant contract documents.

Commentators will be interested in this decision as it adds to the recent body of Supreme Court caselaw on contract interpretation and the debate continues as to whether a trend is emerging of a more literal approach to contract interpretation.

Fenwick Elliott acted for MT Højgaard A/S on this matter.