Examining the implications of contractual obligations on the ‘design life’ of buildings, and how far they extend

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Contracts often include requirements that the works (or their components) achieve a certain design life. Quite what that means can be a vexed question and lead to disputes if one party alleges premature failure. Readers may recall the Supreme Court decision in E.On vs MT Højgaard [2017] UKSC 59, where Højgaard was held to be in breach of the obligation to design the wind turbine foundations to ensure a design life of 20 years, despite this obligation being “tucked away” in the technical requirements.

The issue has recently been considered again in Blackpool Borough Council vs Volkerfitzpatrick Ltd [2020] EWHC 1523. The parties had entered into a contract for the construction of a new tram depot, intended to be a landmark building on the Blackpool seafront. The contract was a modified NEC3 standard form. The works information provided the design life should be 20 years save where specified to the contrary in the functional procurement specification (FPS) (which was also included in the works information). The FPS itself required that the “building structure” should achieve a 50-year design life.

Construction was completed in 2011. In January 2015 a section of the roof detached during high winds. Upon inspection, the council discovered that steel components in the roof space had lost galvanized coating and were significantly more corroded than would have been expected after four years of service life.

Following adjudication proceedings, the council brought a claim in the Technology and Construction Court alleging that significant parts of the depot did not meet their intended design life of 50 years as provided for in the FPS and were unsuitable for the coastal environment. Volkerfitzpatrick’s defence was that the contractual design life requirements were “reasonable care” only, that the required design life of the relevant individual elements was required to be either 25 or 20 years (not 50), depending on the component in question, and that the council had failed to maintain the depot correctly.

The court held that it did not mean the structure should be intended to be maintenance-free for the whole of its design life, but that it ‘ought not to need major repairs over that period’

Although the contract contained a “reasonable care” clause, it also stated that the works were to be provided in accordance with the works information, which included the design life requirements. In addition, a specific clause had been included whereby the contractor “warranted and undertook” that the works would “satisfy any performance specification or other requirement included or referred to in the contract”. As a result, and relying on Højgaard, the court was satisfied that the clauses in the contract should have the same strict character as the Supreme Court had held the clauses in Højgaard to have.

Having decided the design life obligations were “strict” obligations, the court then had to decide a number of other issues relating to design life.

The first was what “design life” actually means. This particular contract contained no definition of the phrase. The court held that it did not mean the structure should be intended to be maintenance-free for the whole of its design life, but that it “ought not to need major repairs over that period”. It held that a distinction should be drawn between anticipated maintenance and major repair, and that given that the contract limited acceptable maintenance to maintenance that was not “non-standard” or “unusually onerous” in regard to requirements for works of a “similar character”, the anticipated maintenance was limited to standard maintenance that could be expected for buildings of this type.

The court also had to decide on the applicable design life. The works information provided that the design for all elements of the work must “unless otherwise specified in the FPS, have a design life of at least 20 years”. It was common ground that the FPS specified a design life of 50 years for the “building structure”.

This case serves as a useful reminder that contracts containing “strict” obligations as to quality will be enforced according to their terms

The council argued that “building structure” included all components of its claim, whereas Volkerfitzpatrick argued that it was limited to the primary structural frame. A “technical design log tender development document” had been produced and attached to the works information and the court found that this provided the clearest guidance as to what was and what was not included in the building structure. As a result it held that the components about which the council was complaining did not fall within the “building structure” and therefore had a required design life of 20 or 25 years rather than the 50 years claimed for by the council.

 Volkerfitzpatrick had also alleged that the council should have maintained areas affected by corrosion with such frequency as to ensure they were kept clean, even if that would require more frequent cleaning than in a non-coastal setting. Given that the design obligation limited acceptable maintenance to that which was not “non-standard” or “unusually onerous” having regard to “normal construction operations” and maintenance requirements applicable for works of a “similar character”, the court found that the comparator was intended to be structures of the same type as the depot (rather than being specific to the particular structure in the particular location). Any maintenance requirements resulting from the particular location would be “non-standard” or “unduly onerous”.

This case serves as a useful reminder that contracts containing “strict” obligations as to quality will be enforced according to their terms, even if those quality obligations are “tucked away” in reams of technical requirements. The relevant clauses in this case are commonplace, so parties to all construction contracts should be alive to the consequences of including them. The case also provides some useful pointers as to how the term “design life” might be interpreted, and how far maintenance obligations will be taken into account in determining its duration.

Victoria Peckett is partner in, and co-head of the construction and engineering team at, CMS UK

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