Student ID Number: 150578905

Supervisor: David Brynmor Thomas (39 Essex Chambers, London)

‘ROBIN RIGG’ UNDER REVIEW:

A STUDY CONCERNING THE OBLIGATIONS OF ‘REASONABLE SKILL AND

CARE’ AND ‘FITNESS FOR PURPOSE’

Final word count: 14231

2

CONTENTS

Abstract p. 4

1 Introduction p. 5

2 Double obligations in construction contracts p. 8

2.1. Design Liability p. 8

2.2. Reasonable skill and care p. 8

2.3. Fitness for purpose p. 9

2.3.1. Implied Suitability – Statute p. 10

2.3.2. Implied Suitability – Common Law p. 11

2.3.3. Express Suitability p. 13

2.4. Codes of Practice p. 14

2.5. Novel Design p. 15

3 Canada and the US p. 17

3.1. ‘Conflicting’ Obligations p. 17

3.2. The Canadian Standard p. 18

3.2.1. Little v North Columbia Construction Ltd p. 18

3.2.2. Greater Vancouver Water District v p. 19

North American Pipe & Steel Ltd

3.2.3. Steel Co. of Canada v Willand Management Ltd p. 22

3.3. The US Spearin Doctrine p. 24

3.4. Discussion; literal vs contextual approach p. 27

3

4 The English perspective p. 30

4.1. Contractual Interpretation: an iterative process p. 30

4.2. Boundaries of Interpretation p. 34

4.3. Robin Rigg under review p. 36

4.3.1. The reasoning of the High Court p. 36

4.3.2. The reasoning of the Court of Appeal p. 40

4.4. Discussion p. 43

5 Conclusion p. 47

Bibliography p. 49

Tables of Statutes and Cases p. 52

Appendices

4

ABSTRACT

This dissertation focuses on two frequently occurring, and related, legal issues with regard to

design liability of contractors. The first is the presence of double obligations (‘reasonable skill

and care’ and ‘fitness for purpose’) in construction contracts. The second is the way in which

the courts use principles of contractual interpretation to establish the precise extent of the

duties imposed on contractors. Based on a comparative analysis of Canadian, US and English

case law, while zooming in on the Robin Rigg1 case, it is argued that the mutual compatibility

of double obligations is negatively affected by the courts’ inconsequent behaviour towards

choosing either a literal or a contextual approach.

1MT Højgaard A/S v E.ON Climate and Renewables UK Robin Rigg East Ltd, E.ON Climate and Renewables

UK Robin Rigg West Ltd [2014] EWHC 1088 (TCC), [2014] BLR 450; [2015] EWCA Civ 407, [2015] BLR 431

(Robin Rigg case).

5

1. Introduction

As the world is experiencing the effects of climate change on an ever increasing scale, and

the United Nations’ Secretary General (Ban Ki-moon) has hailed the Paris climate accord

as “health insurance policy for the planet”,2 it is not surprising that there has been a surge

of newly developed offshore wind farms in the North and Baltic Seas. The statistics show

a further 546 wind turbines being connected to the grid in 2015, while 2014 saw 246 wind

turbines connected.3 It is reasonable, therefore, to conclude that wind energy is a rapidly

evolving and popular industry.

In the early 2000s, however, the knowledge of wind turbine construction was less certain

and perhaps even slightly experimental. It seems fair to say that there were no absolute

views on how to connect the bottom of the turbine tower to the top of the monopile. Some

offshore wind farms, such as Robin Rigg in the Solway Firth, had a transition piece fitted

over the top of the monopile, with the gap between the transition piece and the pile filled

with grout, and the tower fitted onto the transition piece. An illustration of this type of

construction has been attached as Appendix I. In contrast, some other wind farms were

built with so-called shear keys in the grouted connections.4

The installation of the foundations at Robin Rigg began in December 2007 and was

finalised in February 2009. Shortly after completion, another offshore wind farm at

Egmond aan Zee (Netherlands) was experiencing serious problems, as the transition

pieces started to slip down the monopiles. As with Robin Rigg, the turbines were built

without shear keys and according to the same international standard DNV-OS-J101

(‘J101’). A flaw was subsequently discovered in the international standard. As a result, the

grouted connections at Robin Rigg started to fail in April 2010. Remedial works had to be

carried out to a tune of €26.25 million.5

2 United Nations, ‘UN Climate Change Conference Paris 2015’, (United Nations, 21 July 2016, 3) <http://www.un.org/sustainabledevelopment/cop21/> accessed 21 July 2016. 3 Tanja Peschel, ‘Monitoring Offshore Wind Farms in the North Sea’, (Sun & Wind Energy, 31 March 2016, 1) <http://www.sunwindenergy.com/wind-energy/monitoring-offshore-wind-farms-north-sea> accessed 21 July 2016. 4 Robin Rigg case (n 1); [2015] EWCA Civ 407, [8] – [13]. 5 ibid [46] – [54].

6

While the Robin Rigg case ultimately centres on the question of who should bear the cost

of the remedial works, the employer (E.ON) or the contractor (MT Højgaard (‘MTH’)),

the legal significance of the case is much more profound. The courts, firstly, are dealing

with a construction contract possibly containing double obligations of ‘reasonable skill

and care’ and ‘fitness for purpose’ in relation to design liability. The legal question,

therefore, has to be answered of whether, in fact, such double obligations exist. And

second, the courts have to identify the precise extent of the duties imposed upon MTH by

applying established principles of contractual interpretation.

This dissertation will review Robin Rigg by analysing the reasoning of both the UK’s

High Court and the Court of Appeal. But before zooming in on the Robin Rigg case, this

dissertation will zoom out and discuss the occurrence of double obligations in

construction contracts as well as the treatment of such double obligations in Canadian, US

and English case law.

In view of the above, this dissertation aims to examine the correlation between double

obligations in construction contracts and the effects of contractual interpretation.

Accordingly, this dissertation seeks to uncover a pattern in the case law on the basis of

which it can be argued that the mutual compatibility of double obligations is negatively

affected by the courts’ inconsequent behaviour towards choosing either a literal or a

contextual approach.

Since the Supreme Court has listed the Robin Rigg case for hearing on the 20th of June

2017,6 this dissertation intends to contribute to the literature on these issues. Perhaps it

might even influence the Justices to take a unified stance as to what extent the literal

approach should be followed.

This dissertation proceeds with a second chapter describing the different kinds of design

duties as well as the legal status of codes of practice. In the third chapter, Canadian and

US case law that addresses the contractual interpretation of express and implied suitability

obligations and on discovering a ‘general rule’ will be examined. Chapter four will focus

6 This information was received from Robert Greenberg, Chief Case Manager at the Supreme Court of the

United Kingdom.

7

on the English principles of contractual interpretation and the current state of affairs in

that respect. It will then proceed with a critical analysis of the Robin Rigg case. Finally,

the fifth chapter will reiterate the main arguments generated by this research.

8

2. Double obligations in construction contracts

2.1. Design Liability

Depending on the chosen procurement route contractors will either be commencing

their work on the basis of a ‘traditional’ construction contract, where the design is

handled by professional consultants and the construction by contractors, or on the

basis of a ‘design and build’ or ‘turnkey’ construction contract, where contractors

take on the responsibility for all or part of the design (as well as for construction).

More than ever before contractors seem to be obliged to give guarantees concerning

design or suitability, making it crucial for contractors to consider the level of their

design liability from the early beginnings.7

When it comes to identifying the contractors’ design duty, a distinction is usually

made between the obligation to use ‘reasonable skill and care’ opposed to the strict

duty to accomplish a certain outcome. The latter is commonly addressed as a ‘fit for

purpose’ obligation.8

2.2. Reasonable skill and care

In Keating On Construction Contracts,9 the authors address the fact that:

[T]he contractor must do the work with all proper skill and care. It is suggested that this is a continuing duty during construction and not only upon completion. In deciding what degree of skill is required the court will, it is submitted, consider all the circumstances of the contract including the degree of skill expressly or impliedly professed by the contractor.10

7 Sarah Buckingham, ‘Understanding your design duty – “reasonable skill and care” vs. “fitness for purpose” –

mutually incompatible or comfortably coexistent?’, (Fenwick Elliot Annual Review, 11 November 2014, 1)

<http://www.fenwickelliott.com/research-insight/annual-review/2014/understanding-design-duty> accessed 14

June 2016. 8 Sarah Lupton, ‘Design Liability: Problems with defining extent and level’, (2016) ICLR 96, 102. 9 (9th edn, Sweet & Maxwell 2012). 10 ibid [3-050].

9

Subsequently, Section 13 of the Supply of Goods and Services Act 1982 (SGSA 1982)

provides that a professional, who is supplying a service while acting in the course of a

business, is under an implied statutory duty to perform his service with reasonable

skill and care. Should the professional not perform accordingly, this could lead to

‘negligence’ on his part.

To establish whether a ‘professional man’ meets the reasonable skill and care

threshold, his work has to comply with the common law test as set out in Bolam v

Friern Hospital Management Committee.11 In Bolam, McNair J said that “a man need

not possess the highest expert skill (…) it is sufficient if he exercised the ordinary skill

of an ordinary competent man exercising that particular art.”12 Bingham LJ gave

further guidance as to the level of knowledge and skill in the Court of Appeal case of

Eckersley & Others v Binnie & Partners & Others13:14

He must bring to any professional task he undertakes no less expertise, skill and care than any other ordinarily competent members of profession would bring, but need bring no more. The standard is that of the reasonable average. The law does not require of a professional man that he be a paragon, combining the qualities of polymath and prophet.15

As such the employer will have to prove negligence by addressing the fact that the

works or design executed by the contractor or designer do not match the level of a

competent professional. Due to its subjective nature these matters often require

determination on the basis of expert evidence.16

2.3. Fitness for purpose

While the criterion of the ordinary, competent professional is the general default

position, parties are free to opt for a higher standard regarding the execution of the

11 [1957] 1 WLR 582 (QB). 12 ibid 586. 13 [1988] 18 Con LR 1 (CA). 14 Tony Marshall, ‘Design liability in English law’, (2011) 6 Const L Int’l 15, 16 - 17. 15 Eckersley (n 13) 25. 16 Ben Smith, ‘Legal terms explained’, (2012) 23 1 Cons. Law 5.

10

contractor’s or designer’s duties.17 By agreeing to such a higher suitability obligation

the contractor or designer warrants that the works or design will be fit for its intended

purpose. Under these circumstances liability is strict and does not require any form of

negligence from the side of the contractor or designer; liability occurs when the

works or design do not satisfy the given specifications.18

It is generally noteworthy at this stage that strict liability is considered to be a

difficult concept from an insurance point of view. Most professional indemnity

policies will not cover breaches of any type of suitability obligation. Therefore, the

presence of fitness for purpose obligations in contracts might leave the contractor or

designer without an insured defence to suitability claims or, even worse, might make

the policy itself null and void.19

The incorporation of suitability obligations into construction contracts is possible by

implied terms (statute or common law) and/or express terms, as further explained in

the sections below.

2.3.1. Implied Suitability – Statute

Generally two statutory meanings of fitness for purpose can be distinguished. On

the one hand fitness for purpose deals with goods being of a satisfactory

quality20, while at the same time it deals with the suitability of materials and

work21 for the known purpose of the employer. The introduction of the Sale and

Supply of Goods Act 1994 (SSGA 1994) has made this distinction even more

profound.22

17 Marshall, ‘Design liability in English law’ (n 14) 17. 18 Lisa Kingston, ‘Where are we on fitness for purpose under NEC3?’, (Fenwick Elliott Insight, Issue 56

Februari 2016, 1) <http://www.fenwickelliott.com> accessed 2 July 2016. 19 Kingston, ‘Where are we on fitness for purpose under NEC3?’ (n 18) 1. 20 S. 14(2B) Sale of Goods Act 1979, and the equivalent amendments to the provision in s. 4 of the Supply of

Goods and Services Act 1982. 21 S. 14(3) Sale of Goods Act 1979, s. 4(4), 4(5) and 4(6) Supply of Goods and Services Act 1982. 22 Atkin Chambers, Nicholas Dennys and Robert Clay (eds), Hudson’s Building and Engineering Contracts,

(13th edn, Sweet & Maxwell 2015), [3-085].

11

Unlike the professional consultant’s duty to handle the design with reasonable

skill and care (on the basis of the SGSA 1982 as mentioned in section 2.2. of this

dissertation), the contractor’s duty is to supply goods (i.e. completed works).

Based on the SSGA 1994, the goods and materials supplied by the contractor

should always be of satisfactory quality. But where the employer, expressly or by

implication, makes known to the contractor any particular purpose for which the

goods are being bought, the goods should be reasonably fit for that purpose.23

This statutory position has been acknowledged by the House of Lords in the

Young & Marten24 case, which followed the statement of du Parcq LJ in G.H.

Myers & Co v Brent Cross Service Co25:26

A person contracting to do work and supply materials warrants that the materials which he uses will be of good quality and reasonably fit for purpose for which he is using them, unless the circumstances of the contract are such as to exclude any such warranty.27

Thus, in situations where there is adequate reliance on the contractor, suitability

of work and materials will be implied into a construction contract. Most

importantly, reliance on the part of the employer should be to the actual or

constructive knowledge of the contractor and it should not be based upon their

own or their agent’s expertise.28

2.3.2. Implied Suitability – Common Law

At common law there is a general recognition of the potential implication of

terms of fitness where construction works or design are supplied. This can be

derived from the following passage in Hudson’s Building and Engineering

23 Kingston, ‘Where are we on fitness for purpose under NEC3?’ (n 18) 1. 24 [1969] 1 AC 454 (HL). 25 [1934] 1 KB 46 (KB). 26 Atkin Chambers, Nicholas Dennys and Robert Clay (eds) (n 22) [3-086]. 27 G.H. Myers (n 25) 55. 28 Atkin Chambers, Nicholas Dennys and Robert Clay (eds) (n 22) [3-087].

12

Contracts:

In all construction contracts, whatever the descriptive terminology, it is now clear that in the absence of express provision, where an Employer can be seen to rely on the Contractor for design the latter’s responsibility in law will be to produce a final work which, independent of any question of fault on their own part, will be suitable for its required purpose.29

Lord Denning MR gave a relevant obiter dictum in this respect in Greaves & Co

(Contractors) Ltd v Baynham Meikle & Partners30:31

Now, as between the building owners and the contractor, it is plain that the owners made known to the contractors the purpose for which the building was required so as to show that they relied on the contractor’s skill and judgement. It was, therefore, the duty of the contractors to see that the finished work was reasonably fit for the purpose for which they knew it was required. It was not merely an obligation to use reasonable care. The contractors were obliged to ensure that the finished work was reasonably fit for the purpose (…)32

Furthermore, the House of Lords considered the suitability of a complete

structure in Independent Broadcasting Authority v EMI Electronics Ltd and

BICC Construction Ltd.33 Lord Scarman stated that:

In the absence of any term (express or to be implied) negativing the obligation, one who contracts to design an article for a purpose made known to him undertakes that the design is reasonably fit for purpose. Such a design obligation is consistent with the statutory law regulating the sale of goods.34

Reliance of the employer upon the contractor’s design expertise is critical in

assuming fitness for purpose. Whenever the employer executes the

design himself, lays down detailed requirements of the design, or deals

29 ibid [3-099]. 30 [1975] 1 WLR 1095 (CA). 31 Sarah Lupton, ‘Liability for design of a system: Trebor Bassett v ADT Fire’, (2014) ICLR 322, 327. 32 Greaves (n 30) 1098. 33 [1980] 14 BLR 1 (HL) (IBA case). 34 ibid [10-37].

13

with the contractor’s design in any other way, the suitability obligation as to

the design will fall away.35

2.3.3. Express Suitability

As mentioned briefly in section 2.1. of this dissertation, all design and build

contracts involve the responsibility for all or part of the design (as well as for

construction). Therefore, it is a common feature that contractors enter into

contracts containing express suitability obligations.36 These express

undertakings will usually override the normal default, as stated in Hudson’s

Building and Engineering Contracts, with contractors taking on controllable as

well as uncontrollable risks:37

So a contractor will sometimes expressly undertake to carry out work which will perform a certain duty or function, in conformity with plans and specifications, and it turns out that the works constructed in accordance with the plans and specifications will not perform that duty or function. It would appear that generally the express obligation to construct a work capable of carrying out the duty in question overrides the obligation to comply with the plans and specifications, and the contractor will be liable for the failure of the work notwithstanding that it is carried out in accordance with the plans and specifications. Nor will he be entitled to extra payment for amending the work so that it will perform the stipulated duty. Such undertakings will, however, be construed in cases of doubt in the light of the degree of reliance being placed in the contractor’s skill and judgment, as in the case of the implied obligation.38

35 Marshall, ‘Design liability in English law’ (n 14) 18. 36 ‘Evidence can be seen in the guise of standard form construction contracts for plant and engineering works,

for example FIDIC Red Book clause 4.1 requires the contractor to “design (to the extent specified in the

Contract), execute and complete the Works in accordance with the Contract”, which is generally understood to

be a strict obligation. Those of the Institute of Chemical Engineers (I Chem E), of the Institute of Electrical

Engineers, contain similar provisions. GC/Works contains optional strict liability provisions; the NEC is drafted

on the assumption that the default liability would be strict (…)’, Lupton, ‘Liability for design of a system’ (n 31)

332. 37 ibid 332. 38 Atkin Chambers, Nicholas Dennys and Robert Clay (eds) (n 22) [3-095].

14

Absolute obligations (demanding execution of the works to a certain level) often

co-exist together with the common law standard of reasonable skill and care by

which professionals should perform their services. Due to the fact that

construction contracts contain many different kinds of documents (often by

different author’s), problems occur in identifying whether or not an absolute

duty exists. These difficulties arise especially where it is obvious from the

contract that suitability of the contractor’s design is desired with reference to

international or industry standards.39

2.4. Codes of Practice

International or industry standards are not mandatory in law.40 Therefore, establishing

liability based on the sole fact of failing to comply with an international or industry

standard is doubtful. But it could work as an incentive to convince the courts of

negligence, which can be derived from the New Zealand case Bevan Investments Ltd

v Blackhall and Struthers (no. 2)41:42

Bearing in mind the function of codes, a design which departs substantially from them is prima facie a faulty design, unless it can be demonstrated that it conforms to accepted engineering practice by rational analysis.43

On the other hand, designers should not deceive themselves by rigidly holding on to

international or industry standards as can be concluded from Holland Hannen and

Cubitts (Northern) Ltd v Welsh Health Technical Services Organisation.44 In Holland

Hannen, Goff LJ said that “it is plain from the evidence that the code of practice is no

more than a guide for use by professional men, who have to exercise their own

39 ibid [3-095]. 40 David Philip, ‘How Long is a Life Cycle (London)’ (CEE SIG Seminar, Lloyd’s Old Library, 3 June 2015)

<http://www.cila.co.uk> accessed 2 July 2016. 41 [1979] 11 BLR 78; [1978] 2 NZLR 97 (CA). 42 Anthony Speaight and Gregory Stone, Architect’s Legal Handbook (8th edn, Architectural Press (Elsevier)

2004), 369 – 370. 43 Bevan (n 41) 65 – 66. 44 [1985] 35 BLR 1 (CA).

15

expertise.”45

Since codes of practice correspond with the design process itself, they must be

handled with due skill and care.46 In that respect designers should, while executing

the service, constantly monitor whether their design meets the relevant professional

levels and customs (‘state of the art’ defence). Or a designer should possibly seek

reliance on a particular body of professional opinion underlining the course of action

taken by the designer (‘respectable body of opinion’ defence).47

2.5. Novel Design48

Most notably, ‘state of the art’ discussions arise where designers deal with novel

designs. For example, in the IBA49 case the claimant (IBA) had contracted with EMI

to design and build three cylindrical aerial masts. BICC, being the nominated

subcontractor, had executed the design for the masts. When the first of the three

masts failed (in March 1969), IBA started proceedings against EMI for breach of

contract and negligence. BICC was similarly sued for negligence, breach of warranty

and negligent misstatement. Parties acknowledged that the mast was “both at and

beyond the frontier of professional knowledge at that time.”50 However, the House of

Lords took the view that having no precedent for the design of a tall mast cannot

pardon the designer for its failure. Designers should think of extra safety measures

when dealing with a novel design.51

Innovative design requiring designers to take special precautions has been

acknowledged in Try Build Ltd v Invicta Leisure Tennis Ltd,52 in which case the 45 ibid 10. 46 Philip, ‘How Long is a Life Cycle (London)’ (n 40). 47 Marshall, ‘Design liability in English law’ (n 14) 17. 48 Sarah Lupton, Cornes and Lupton’s Design Liability in the Construction Industry (5th edn, Wiley Blackwell

2013) [8.4.2]. 49 IBA case (n 33). 50 ibid [10-12]. 51 Nicholas Gould, ‘Design and Build Contracts and Liability’, (Seminar, King’s College London, 9 July 2012)

<http://www.fenwickelliott.com> accessed 2 July 2016. 52 [1997] 71 Con LR 140 (QB).

16

novelty of the roof design made the court decide that the engineers should have given

specifications regarding the foil thickness and also the ‘water-tightness’ of the roof.

In addition, the court decided that appropriate tests were necessary.53

It is argued at this point that the design carried out by MTH’s designer, Rambøll

Danmark A/S, in the Robin Rigg case was indeed a novel design. The design was

developed between mid-2006 and mid-2007, on the basis of the J101 international

standard as published by DNV in June 2004. Although the technique itself, using

grouted connections to join tubular steel structural members, had been available since

the 1970s, the application of the technique in offshore wind turbines was a new and

recent development at the time. The first offshore wind farm with grouted

connections only appeared in 2002 off the coast of Denmark.54

Furthermore, it becomes clear from the factual matrix that the fundamental problems

with J101 and the grouted connections were discovered around September 2009, after

turbines constructed in accordance with J101 had been shifting on their foundations.55

As indicated by Diamond, “measures are being taken to address this matter, although

their effectiveness remains to be seen (…) The lack of a historical track record and

the uncertain effectiveness of these technological design advances may be a risk that

wind farm investors and developers may be willing to, or may need, to take.”56 By

her choice of words Diamond is clearly regarding J101 as a design standard without

any precedent.

The following chapters will focus on the treatment of double obligations in Canadian,

US and English case law.

53 ibid [77] and [88]. 54 Robin Rigg case (n 1); [2014] EWHC 1088 (TCC), [4], [5], [10]. 55 ibid [37]. 56 Kimberly E. Diamond, ‘Extreme Weather Impacts on Offshore Wind Turbines: Lessons Learned’, (2012)

NR&E 37, 38.

17

3. Canada and the US

3.1. ‘Conflicting’ Obligations

As observed in the previous chapter, the modern design and build contractor plays a

dual role in the execution of the works. Establishing the level of his liability has

become quite a task with respect to the two separate elements of design and

construction. These contractors appear to be under conflicting obligations, although it

was confirmed by the Court of Appeal in the IBA case that “we see no reason (…) for

not importing an obligation as to reasonable fitness for purpose into these contracts or

for importing a different obligation in relation to design from the obligation which

plainly exists in relation to materials.”57

As a general guideline it seems wise for design and build contractors to assume an

implied suitability obligation when executing design work, with the apparent

exception of design of a system58 (which the court refused to treat equally to that of a

component or structure). But at the same time it appears questionable that design by a

professional consultant attracts a different level of responsibility than design by a

contractor. Even though it is true that, in comparison, design and build contractors are

more accustomed to delivering a finished product instead of merely providing a

service.59

Interestingly, the tension between ‘reasonable skill and care’ and ‘fitness for purpose’

appears to be the most profound when express contract terms are used extensively

throughout the contract, but inconsistently or in a conflicting manner. Parties would

then be under an obligation to use reasonable skill and care and to ensure a certain

outcome.60 This will be further investigated in the following sections.

57 IBA case (n 33); [1979] 11 BLR 29 (CA) 52. 58 Trebor Bassett Holdings Ltd v ADT Fire and Security plc [2011] EWHC 1936 (TCC), [2011] BLR 661;

[2012] EWCA Civ 1158, [2012] BLR 441. 59 Buckingham, ‘Understanding your design duty’ (n 7) 2. 60 Lupton, ‘Design Liability’ (n 8) 103.

18

3.2. The Canadian Standard

Since the courts in Robin Rigg61 have referred to Canadian (persuasive) authorities, it

seems appropriate to start with an investigation of the Canadian standard.

3.2.1. Little v North Columbia Construction Ltd62

Most recently, Hyslop J considered the Canadian standard in Little, a Supreme

Court case which centred on a contract between Mr Little (‘Little’) and North

Columbia Construction Ltd (‘Columbia’) to construct a snow roof for his mobile

home. However, the roof collapsed when snow came, due to the lack of cross

bracing on the post and beam support frame. Mr Bourcet stated this in his expert

opinion on the matter.63

The legal issue at hand was, of course, whether Columbia breached its contract

with Little, when it failed to build the snow roof for its intended purpose. To

determine whether this was the case, Hyslop J made the following findings of

fact;

Firstly, he concluded that the contractor had the skills necessary to build the

snow roof by establishing that the contractor enjoyed a good reputation, had a

good education and had 15 years’ experience. Even the contractor himself had

testified that the work was “well within my scope.”64

Secondly, it was established that the contractor controlled the process of

decision-making with regard to the construction of the snow roof, the necessary

materials, complying with municipality’s inspections and the building inspector’s

requests.65 Little had only supplied the contractor with a sketch of his wishes.

Otherwise he had had no input into the design or the production of the plans of

61 Robin Rigg case (n 1). 62 [2015] CarswellBC 3817, [2015] BCSC 2441, [2016] BCWLD 1373, 262 ACWS (3d) 355. 63 ibid [7]. 64 ibid [17], [27], [28]. 65 ibid [46].

19

the snow roof.66 Little was not at all aware of the fact that the contractor had

subcontracted the preparation of the building designs and site plan to a design

company.67

Furthermore, as a result of cross-examination, it was established that the

municipality’s building inspector, Mr Luini, and the contractor had discussions

prior to the final inspection. Luini had insisted on additional cross bracing to the

roof, but according to the contractor neither the municipality plans nor the

building code required cross bracing and, therefore, the installation of cross

bracing was not essential for the contractor to fulfil its obligations.68 Also the

contractor had not discussed Luini’s observation or his discussions with Luini

with his employer Little, while he was obliged to do so.69

Hyslop J ultimately concluded that Columbia breached its contract with Little,

since Little relied on the skill and judgment of Columbia concerning the

suitability of the design of the snow roof.70 The decision was based on the

following rule:

The general rule is that defects caused by an owner’s specification are not the responsibility of the contractor, unless the contractor expressly guarantees that the construction would be fit for a specific purpose, or a warranty can be implied by the owner’s actual reliance on the contractor’s skill and judgment.71

3.2.2. Greater Vancouver Water District v North American Pipe & Steel Ltd72

Hyslop J applied the aforementioned general rule with clear reference to

Chiasson J in Greater Vancouver, who had stated that “in my view, that is a

66 ibid [19], [41]. 67 ibid [35], [36]. 68 ibid [57] – [64]. 69 ibid [51] – [56], [76]. 70 ibid [77], [91]. 71 ibid [65] (emphasis added). 72 [2012] CarswellBC 2410, [2012] BCCA 337, [2012] 11 WWR 271, [2012] BCWLD 6299, 13 CLR (4th) 176.

20

correct statement of the law.”73 Despite the fact that a general rule has been

recognised, the application of it still differs significantly.

In the Greater Vancouver case North American Pipe & Steel Ltd (‘NAP’) had

been allocated a contract, after a tendering process, to supply water pipes to the

water authority, Greater Vancouver Water District (‘GVWD’). GVWD had

clearly set out the design requirements, specifying the type of pipe and how it

was to be protectively coated. During installation of the pipes, however,

problems occurred concerning the pipes’ outer coating, proving them defective.

NAP did execute some remedial works, but under protest.74

The Supply Agreement contained the following relevant provisions, in clauses

4.4.3 and 4.4.4:

The Supply Contractor warrants … that the Goods … will conform to all applicable Specifications … and, unless otherwise specified, will be fit for the purpose for which they are to be used… The Supply Contractor warrants and guarantees that the Goods are free from all defects arising at any time from faulty design in any part of the Goods.

The trial judge observed, furthermore, that the pipes had been produced in line

with GVWD’s specifications, but that the pipes endured serious defects in the

coating as a result of GVWD demanding the application of a seal coat over an

outer-wrapping.75

A crucial issue in the case was whether NAP had supplied suitable pipes. In that

respect the trial judge zoomed in on the role GVWD had played regarding the

specifications:

73 ibid [25]. 74 Michael Parrish and Marina Pratchett, ‘Suppliers Beware When Warranting Design’, (Fasken Martineau

DuMoulin, 26 November 2012, 1) <http://www.lexology.com> accessed 2 July 2016. 75 Greater Vancouver (n 72) [2] – [5].

21

In order to determine whether the warranties and guarantees given by NAP make it liable for any faults arising from the specification provided by the GVWD, the circumstances of the selection of the seal coat, and the specific wording of the Supply Agreement must be considered. The GVWD is attempting to rely on the language of the Supply Agreement to argue that even if the alleged deficiencies were caused by the specification of the seal coat, the GVWD is not liable because NAP guaranteed that the pipe would be fit for its intended purpose and it was entitled to rely on NAP’s skill and judgment. The problem with this argument is that it ignores that NAP was also contractually obliged to build the pipe according to the GVWD’s specifications and there is no evidence that the GVWD relied on NAP’s skill and judgment to select the design or materials. The GVWD developed its specifications without any input from NAP, and did not make any inquiries of NAP as to whether NAP was of the view the inclusion of the seal coat would cause problems with the fusion of the layers of CTE coating. The responsibility and control of the design process for the CTE coating was maintained by the GVWD throughout the project.76

Interestingly, the trial judge concluded that the supply contract was inconsistent.

Had NAP chosen to shun the specified method of seal coating, the pipes would

not agree to the specifications and if it produced in line with the specifications,

the pipes would be defective.77 The trial judge subsequently referred to BG

Checo v BC Hydro78 in order to reconcile the inconsistency:

Where the provisions of a contract are inconsistent, an attempt should be made to reconcile them by giving effect to the terms in accordance with the intention of the parties. If it is impossible to reconcile the terms in this way, then the term that is repugnant to the parties’ intention is to be rejected in favour of giving effect to the term that reflects their real intention.79

The trial judge determined that NAP could not be held responsible for defects

resulting from GVWD’s specifications. The words of clause 4.4.4 should

effectively be read as “all defects arising at any time from faulty design

76 ibid [15]. 77 ibid [16]. 78 [1993] 1 SCR 12. 79 ibid 23 – 24.

22

performed by NAP.”80

However, the Court of Appeal dismissed the decision of the trial judge as will be

further discussed in the next section.

3.2.3. The Steel Company of Canada Ltd v Willand Management Ltd81

According to Chiasson J the trial judge in Greater Vancouver “fell into the same

error as did the Ontario Court of Appeal in Steel Co[mpany].”82 In the latter case

the contractor had first advised the employer regarding the best way of

constructing a certain steel sheet roof. Parties discussed an adhesive substance

named ‘Curadex’ to bond insulating material to the steel sheet. The contractor

had some experience with Curadex and was prepared to use it, although he

preferred hot asphalt for sloping roofs. The employer’s specifications then

required the contractor to attach insulation boards using the material “Curadex or

approved equal”, which the contractor accepted. The contractor also provided a

five-year guarantee “that all above work specified will remain weather-tight and

that all material and workmanship employed are first class and without defect.”83

The Ontario Court of Appeal considered the issues at hand to be similar to the

New York case of MacKnight Flintic Stone v City of New York,84 which centred

on the construction of a contractor’s guarantee. The work was to be completed in

perfect order and “guaranteed absolutely weather and damp proof for five years

from the date of acceptance of the work. Any dampness or water breakage within

that time must be made good by the contractor without any cost or expense to the

City.” The Ontario Court of Appeal then followed the reasoning in the

MacKnight case by Vann J:

80 Greater Vancouver (n 72) [17] (emphasis added). 81 [1966] CarswellOnt 62, [1966] 1 SCR 746, 58 DLR (2d) 595. 82 Greater Vancouver (n 72) [30]. 83 Atkin Chambers, Nicholas Dennys and Robert Clay (eds) (n 22) [3-096]. 84 [1899] 160 NY 12.

23

The reasonable construction of the covenant under consideration is that the plaintiff should furnish the materials and do the work according to the plan and specifications, and thus make the floors water tight so far as the plan and specifications would permit.85

The Ontario Court of Appeal, like the trail judge in Greater Vancouver,86

interpreted the guarantee by inserting certain words into the guarantee:

[U]nder the circumstances the plaintiff guaranteed only that, as to the work done by it, the roof would be weather-tight in so far as the plans and specifications with which it had to comply would allow.87

By doing so it seems that a contractor attracts no responsibility for the usage of

defective materials, regardless of his experience in a certain field, on the

condition that these materials have been requested by the employer and are part

of the specifications. This view is supported by another judgment by Vann J in

MacKnight:

The defendant, (i.e. the owner), specifically selected both material and design and ran the risk of a bad result. If there was an implied warranty of sufficiency, it was made by the party who prepared the plan and specifications, because they were its work, and in calling for proposals to produce a specified result by following them, it may fairly be said to have warranted them adequate to produce that result.88

The Canadian Supreme Court, however, dismissed this approach with clear

reference to the express suitability statement in the 8th edn of Hudson’s Building

and Engineering Contracts, of which the most recent version has been discussed

in section 2.3.3. of this dissertation.89 The Supreme Court therefore concluded:

[W]hatever the reason may have been, it appears to me that any risk involved in the undertaking was accepted by those who were prepared to tender in accordance with specifications that included the requirement of providing a written guarantee that all material employed in the work as

85 Steel Company (n 81) 751. 86 Greater Vancouver (n 72). 87 Steel Company (n 81) 751 (emphasis added). 88 ibid 753. 89 Atkin Chambers, Nicholas Dennys and Robert Clay (eds) (n 22) [3-095].

24

first class and without defect, and that “all work (…) specified” would remain weather tight for a period of five years.90

Similarly, Chiasson J concluded in Greater Vancouver that there was no legal

or logical inconsistency between the clauses 4.4.3 and 4.4.4.91 The guarantee in

clause 4.4.4 was clear and unambiguous and reflected the allocation of risk to

which the parties had agreed. Chiasson J stated, therefore, that “on the plain

language of the contract, North American is liable for any damages that resulted

from those defects. It does not matter whose design gave rise to the defects.”92

These cases show that express terms are capable of acting as freestanding

warranties of suitability.93

3.3. The US Spearin Doctrine

Despite the fact that both the trial judge in Greater Vancouver94 and the Ontario

Court of Appeal in Steel Company95 were overruled, the reasoning displayed by these

courts deserves some further attention in light of this dissertation. And since the

MacKnight96 case served as a guiding authority to the Ontario Court of Appeal, it

appears that this old American precedent, dealing with implied warranties of

suitability, remains compelling.97

However, when considering such implied warranties it would have been evenly

accurate to refer to the so-called ‘Spearin Doctrine’, which is based on the leading US

Supreme Court case United States v Spearin.98 The doctrine determines that:

90 Steel Company (n 81) 754. 91 Greater Vancouver (n 72) [23]. 92 ibid [32] – [33]. 93 Philip J. Scheibel, ‘Understanding Construction Warranties in Canada’, (2015) J. Can. C. Construction Law.

137, 153. 94 Greater Vancouver (n 72). 95 Steel Company (n 81). 96 MacKnight (n 84). 97 Paul Sandori, ‘Air Barriers: Who is Responsible?’, (1988) 28 CLR 152, 154. 98 [1918] 248 U.S. 132.

25

[A]n owner impliedly warrants that the plans and specifications, if followed, will result in a functioning system. The corollary to the doctrine is that the contractor will not be liable to the owner for loss or damage resulting solely from defects or deficiencies in the plans and specifications.99

In addition, US courts require employers to produce clear and certain design

specifications.100

Although design and build contractors will usually receive general design and

performance criteria from the employer (‘performance specifications’), instead of

detailed design documents under a traditional construction contract (‘design

specifications’), the assumption that design and build contractors will always carry

the risk of defects in specifications is not completely true. When dealing with so-

called ‘hybrid specifications’, or in situations where the employer fully controls the

design, this might not be the case. As stated by Hammersmith and Lozowicki, “the

increasing use of design-build procurement, and in general the furnishing by project

owners of specifications which are a composite of both ‘design’ and ‘performance’

elements, muddy the application of the Spearin and Blake rules.”101

Since the Spearin Doctrine does not apply to construction contracts based on

performance specifications, the distinction between ‘design’ and ‘performance’

specifications has become a crucial matter for the US courts. A contractor executing

the works under design specifications “has no discretion to deviate from the

specifications, but is ‘required to follow them as one would a road map’.”102 A

performance specification on the other hand is a “statement of required results with

criteria verifying compliance, without unnecessary limitations on the methods of

99 Lauren P. McLaughlin and Shoshana E. Rothman, ‘When Spearin Won’t Work: How Contractual Risk

Allocation Often Undermines This Landmark Ruling’, (2015) 35-SUM Construction Law. 39, 40. 100 Blake Construction Company v United States, [1993] 987 F.2d 743. 101 Harold E. Hammersmith and Edward B. Lozowicki, ‘Can the Spearin Doctrine Survive in a Design-Build

World: Who Bears Responsibility for Hybrid Specifications?’, (2008) Vol. 2 No. 1 J ACCL 123, 124. 102 Blake (n 100) 745.

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achieving the required results.”103 As a result the case law on these types of warranty

disputes depends heavily on the facts and requires a thorough investigation of the

specifications by the courts.104 In design and build situations it is generally accepted,

however, that an employer’s guarantee is implied when details such as particular

components, dimensions, types or qualities of materials (and other details) are

nominated by the employer.105

Special reference is made to AAB Joint Venture v United States106, in which case the

design and build contractor was required to follow the standards of the American

Association of State Highway and Transportation Officials (AASHTO) while

building a military storage base in Israel. Next to the AASHTO standards (dealing

with the density of the groundfill) the government had added technical requirements

(dealing with the size of the stones to be used as groundfill) to the bidding

specifications. After the contractor had discovered that following the specifications

would lead to a defective outcome, the parties’ dispute centred on the question

whether the specifications were of the performance kind (as the government claimed

them to be). Since the contractor was able to convince the court that the AASHTO

standards could not be executed, due to the technical requirements for the size of the

stones, the court decided that the contractor was allowed to reasonably rely on the

bidding specifications. Hammersmith and Lozowicki have commented in this respect

that:

[T]he court relied on traditional contract interpretation, to determine the design-build contractor’s and owner’s reasonable expectations and applied the Spearin implied warranty to determine the contractor was entitled to an equitable adjustment.107

103 AIA/AGC Joint Committee, ‘Recommended Practices of the Houston Chapters of the AIA/AGC, 1.06 -

Application of Performance Specifications (January 1995)’, (April 2011) <http://www.agchouston.org> accessed

21 July 2016. 104 Laura E. Hauser and William J. Tinsley Jr., ‘Eyes Wide Open: Contractors Must Learn to Identify And React

To Design Risks Assumed Under Performance Specifications’, (2007) 27-SUM Construction Law. 32, 33. 105 Hammersmith and Lozowicki, ‘Can the Spearin Doctrine Survive in a Design-Build World’ (n 101) 125 –

126. 106 [2007] 75 Fed. Cl. 414 (AAB case). 107 Hammersmith and Lozowicki, ‘Can the Spearin Doctrine Survive in a Design-Build World’ (n 101) 127 –

128.

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Finally, it has become clear from recent case law108 that the presence of contractor’s

express guarantees regarding the suitability of the design will block the applicability

of the Spearin Doctrine.109

3.4. Discussion; literal vs contextual approach

Considering the fact that the Spearin Doctrine goes back to 1918, it is interesting to

notice a modern trend towards ascertaining the intention of the parties through the so-

called ‘categorical analysis’. Characterising the plans and specifications in question

as either a design or performance specification has generally replaced the traditional

fact-intensive, expectations-based analysis. Most importantly, the categorical analysis

is strictly based on the language of the contract. Even though this very literal

approach has its benefits, as it is for example far less time consuming, it has also

attracted criticism from some authors, like Golden and Thomas,110 who feel strongly

that the plain language of the contract cannot reveal the expectations of the parties.111

Golden and Thomas describe in detail how the current methodology, based on the

specification’s language, differs from the earlier, contextual approach “looking below

the surface of the specification’s phrasing for evidence of how the parties intended to

allocate the risk of loss for the defective specification.”112 According to Golden and

Thomas the Spearin Doctrine had essentially been created to serve the parties and

their expectations, while at the same time shielding contractors from unforeseen risks.

In this respect Golden and Thomas explicitly address the Helene Curtis Industries

Inc. v United States113 case to underline the importance of defining the wider 108 Greenbriar Digging Service Limited Partnership v South Central Water Association Inc., No. 3:07CV601

DPJ-JCS, [2009] WL812241, 3 – 4 (S.D. Miss. Mar. 26, 2009). 109 Joseph A. Cleves Jr. and Richard G. Meyer, ‘No-Fault Construction’s Time Has Arrived’, (2011) 31 Constr.

Law. 6, 7. 110 Kevin C. Golden and James W. Thomas, ‘The Spearin Doctrine: The False Dichotomy Between Design and

Performance Specifications’, (1995 – 1996) 25 Pub. Cont. L.J. 47. 111 Hammersmith and Lozowicki, ‘Can the Spearin Doctrine Survive in a Design-Build World’ (n 101) 124 –

125. 112 Golden and Thomas, ‘The Spearin Doctrine’ (n 110) 53. 113 [1963] 312 F.2d 774 (Ct. CL. 1963).

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circumstances regarding the contract’s formation as well as the parties’ conduct. They

refer to the language of the specification as “a relatively infertile source of such

information.”114

Interestingly, in the recent AAB115 case, as discussed in the previous section, the court

applied the contextual approach and concluded that the contractor reasonably relied

on the bidding specifications. Since the government had argued that the specifications

should be classified as performance specifications, the question comes to mind

whether a literal approach by the court would have produced a different outcome in

this dispute. Although it will remain unclear how a literal approach would have

affected the verdict, the mere fact that codes of practice are generally regarded as

guidelines (with reference to section 2.4. of this dissertation) may indicate that the

contractor was indeed given discretion by the government to deviate from the

AASHTO standards as well as the added technical requirements. In view of this, a

literal approach could conceivably have altered the outcome, categorising the

specifications as performance specifications and leaving the contractor without an

implied warranty.

Despite the fact that the Canadian cases Greater Vancouver116 and Steel Company117

centre on express obligations, in identifying the extent of the duties imposed on the

contractor, it appears that the lower courts applied a similar contextual approach, as

did the courts in the AAB118 case. The Canadian courts, however, felt inclined to

insert certain words into the guarantees given by the respective contractors. Such

actions could possibly be perceived as being on the cusp of rectification (which will

briefly be discussed in the following chapter). Nevertheless, the contextual approach

lead the lower courts to a verdict in favour of the respective contractors, while the

higher courts’ literal approach held the respective contractors liable for any damages

resulting from designer defects, regardless of whose design gave rise to the defects. In

other words, the contextual approach defined the extent of the contractors’ duty as

114 Golden and Thomas, ‘The Spearin Doctrine’ (n 110) 53 - 56. 115 AAB case (n 106). 116 Greater Vancouver (n 72). 117 Steel Company (n 81). 118 AAB case (n 106); cf Hammersmith and Lozowicki (n 107).

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being one of reasonable skill and care, whereas the literal approach defined the extent

of the contractors’ duty as one of (express) suitability.

If anything these cases suggest that a choice between a literal or contextual approach

could affect the extent of the duties imposed on contractors. Since the courts

generally seem to differ as to the importance placed upon contextual factors, this

indicates an added uncertainty for contracting parties when formulating their mutual

obligations in construction contracts.

The following chapter will further investigate the ‘rules’ of contractual interpretation

and subsequently review the reasoning of both the High Court and the Court of

Appeal in Robin Rigg.119

119 Robin Rigg case (n 1).

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4. The English Perspective

4.1. Contractual Interpretation: an iterative process120

It should not come as a surprise that the English courts are equally struggling in

finding an appropriate approach to contractual interpretation. It is yet far from settled

whether the English courts favour a literal approach to a more ‘purposive’ approach.

The general question therefore remains: will the words overshadow the context or

vice versa?

To properly understand the current state of affairs it is necessary to get acquainted

with the principles of interpretation, also referred to as the ‘Hoffmann Principles’, as

were set out by Lord Hoffmann in the Investors Compensation Scheme v West

Bromwich Building Society121 case:

(1) Interpretation is the ascertainment of the meaning which the document would

convey to a reasonable person having all the background knowledge which

would reasonably have been available to the parties in the situation in which

they were at the time of the contract.

(2) The background was famously referred to by Lord Wilberforce as the ‘matrix

of fact’, but this phrase is, if anything, an understated description of what the

background may include. Subject to the requirement that it should have been

reasonably available to the parties and to the exception to be mentioned next, it

includes absolutely anything which would have affected the way in which the

language of the document would have been understood by a reasonable man.

(3) The law excludes from the admissible background the previous negotiations of

the parties and their declarations of subjective intent. They are admissible only

in an action for rectification. The law makes this distinction for reasons of

practical policy and, in this respect only, legal interpretation differs from the

120 H.G. Beale (ed), Chitty on Contracts, (32nd edn, Sweet & Maxwell 2015); E. Peel (ed), Treitel on The Law of

Contract, (14th edn, Sweet & Maxwell 2015); K. Lewison, The Interpretation of Contracts, (6th edn, Sweet &

Maxwell 2015); G. McMeel, The Construction of Contracts: Interpretation, Implication, and Rectification, (2nd

edn, Oxford University Press 2011). 121 [1998] 1 WLR 896 (ICS case).

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way we would interpret utterances in ordinary life. The boundaries of this

exception are in some respects unclear. But this is not the occasion on which to

explore them.

(4) The meaning which a document (or any other utterance) would convey to a

reasonable man is not the same thing as the meaning of its words. The meaning

of words is a matter of dictionaries and grammars; the meaning of the

document is what the parties using those words against the relevant

background would reasonably have been understood to mean. The background

may not merely enable the reasonable man to choose between the possible

meanings of words which are ambiguous but even (as occasionally happens in

ordinary life) to conclude that the parties must, for whatever reason, have used

the wrong words or syntax (see Mannai Investment Co Ltd v Eagle Star Life

Assurance Co Ltd).122

(5) The ‘rule’ that words should be given their ‘natural and ordinary meaning’

reflects the commonsense proposition that we do not easily accept that people

have made linguistic mistakes, particularly in formal documents. On the other

hand, if one would nevertheless conclude from the background that something

must have gone wrong with the language, the law does not require judges to

attribute to the parties an intention which they plainly could not have had. Lord

Diplock made this point more vigorously when he said in Antaios Cia Naviera

SA v Salen Rederierna AD (The Antaios):123

[I]f detailed semantic and syntactical analysis of words in a commercial contract is going to lead to a conclusion that flouts business common sense, it must be made to yield to business common sense.124

(6) Adding to the five Hoffmann Principles Lord Mance stated in Re Sigma

Finance Corporation (In Administration)125 that:

[T]he resolution of an issue of interpretation (…) is an iterative process (…) ‘checking each of the rival meanings against other provisions of the document and investigating its commercial consequences’. 126

122 [1997] AC 749. 123 [1985] AC 191. 124 ibid 201. 125 [2009] UKSC 2; [2010] 1 ALL ER 571. 126 ibid 12.

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While these principles should have created certainty, enabling the English courts to

construe commercial contracts in a resolute manner, the opposite seems to be true.

The principles have caused tension in the case law.127

As the first principle clearly points out, the parties’ agreement requires an objective

interpretation. Instead of focusing on the individual parties and their understanding of

the words, importance should be given to the understanding of the words by a

reasonable person in the position of the parties. It then follows from the second

principle that interpretation is a so-called ‘unitary exercise’, meaning that the courts

will look at both the language used as well as the context in which it was used. In

addition, Lord Hoffmann confirmed the ‘primacy of the language’ in BCCI v Ali128

stating “the ‘background’ only includes ‘absolutely anything’ which a reasonable

person would have regarded as relevant.”129 130

The difficulty appears to be that the ‘Hoffmann Principles’ have stimulated a

purposive attitude towards interpretation. For example, courts have allowed a

business sense to business documents,131 but the extent of ‘business common sense’

was never clarified. It was determined by Lord Clarke in Rainy Sky SA v Kookmin

Bank132, however, that “if there are two possible constructions, the court is entitled to

prefer the construction which is consistent with business common sense and to reject

the other.”133 In Napier Park European Credit Opportunities Fund Ltd v

Harbourmaster Pro-Rata CLO BV134 it was further established that ‘business

common sense’ should be used from the offset by the courts in their ‘unitary exercise’

127 Beale (ed) (n 120) [13-046]. 128 [2001] UKHL 8; [2002] 1 AC 251. 129 ibid [39]. 130 Peel (ed) (n 120) [6-008] – [6-011]. 131 See Lord Bingham in Homburg Houtimport BV v Agrosin Private Ltd (The Starsin) [2003] UKHL 12; [2004]

1 AC 715, [10]. 132 [2011] UKSC 50; [2011] 1 WLR 2900. 133 ibid [21]. 134 [2014] EWCA Civ 984.

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to discover any ambiguity.135 Reference was made in that respect to a statement by

Lord Sumption in Sans Souci Ltd v VRL Services Ltd:136

It is generally unhelpful to look for an ‘ambiguity’, if by that is meant an expression capable of more than one meaning simply as a matter of language. True linguistic ambiguities are comparatively rare. The real issue is whether the meaning of the language is open to question. There are many reasons why it may be open to question, which are not limited to cases of ambiguity.137

Moreover, it should be stressed that in cases of unambiguous language the courts are

bound to it,138 whether or not the outcome is commercially disadvantageous to one of

the parties.139

Interestingly, allowing ‘business common sense’ to be used as part of the ‘unitary

exercise’ might be an important reason of the frequent tension between the words

chosen by the parties and the courts’ search for the commercial bargain. The Supreme

Court appears to have acknowledged this reoccurring phenomenon in Arnold v

Britton,140 while attempting to counterbalance it. Lord Neuberger made the following

comments concerning the interpretation of contractual provisions:

The exercise of interpreting a provision involves identifying what the parties meant through the eyes of a reasonable reader, and, save perhaps in a very unusual case, the meaning is most obviously to be gleaned from the language of the provision. Unlike commercial common sense and the surrounding circumstances, the parties have control over the language they use in the contract. And, again save perhaps in a very unusual case, the parties must have been specifically focussing on the issue covered by the provision when agreeing the wording of that provision.141 [T]he clearer the natural meaning the more difficult it is to justify departing from it. However, that does not justify the court embarking on an exercise of searching for, let alone constructing, drafting infelicities in order to facilitate a

135 ibid [36]. 136 [2012] UKPC 6. 137 ibid [14]. 138 Sugarman v CJS Investments LLP [2014] EWCA Civ 1239; [2015] 1 BCLC 1, [43]. 139 Peel (ed) (n 120) [6-012]. 140 [2015] UKSC 36; [2015] AC 1619. 141 ibid [17].

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departure from the natural meaning.142 Commercial common sense is only relevant to the extent of how matters would or could have been perceived by the parties, or by reasonable people in the position of the parties, as at the date that the contract was made.143 [A] court should be very slow to reject the natural meaning of a provision (…) The purpose of interpretation is to identify what the parties have agreed, not what the court thinks that they should have agreed (…) Accordingly, when interpreting a contract a judge should avoid re-writing it in an attempt to assist an unwise party or to penalise an astute party.144

Although Lord Neuberger’s comments seem to suggest that less reliance should be

placed on ‘commercial common sense’, and therefore on the contextual approach, it

remains unclear whether Lord Clarke (Rainy Sky145) and Lord Mance (Re Sigma146),

both of whom were absent from the panel in Arnold v Britton,147 would have been in

full support of Lord Neuberger’s statement. Perhaps it would be best to follow Simon

James and Kate Gibbons in their balanced conclusion that Lord Neuberger does not

seem to suggest a fundamentally different approach to interpretation. Instead he

appears to indicate that the literal approach should only be replaced by a contextual

approach in cases where the words are obviously mistaken/clearly wrong.148

4.2. Boundaries of Interpretation

Despite Lord Neuberger’s aforementioned comments, when the language of an

agreement does not reflect the parties’ consensus, Hoffmann Principles four and five

could be used to correct drafting mistakes. Lord Hoffmann emphasised in Chartbrook

Ltd v Persimmon Homes Ltd149 that courts have no boundaries regarding the amount

of verbal arrangement or correction to be applied. Although it should be clear that

“something has gone wrong with the language and that it should be clear what a

142 ibid [18]. 143 ibid [19]. 144 ibid [20]. 145 Rainy Sky (n 132). 146 Re Sigma (n 125). 147 Arnold v Britton (n 140). 148 Simon James and Kate Gibbons, ‘English law contractual interpretation: shades of grey’, (2016) Int. ALR 35. 149 [2009] UKHL 38; [2009] 1 AC 1101.

35

reasonable person would have understood the parties to have meant.”150

When making corrections as a matter of interpretation, the written agreement will,

according to Richard Buxton, theoretically remain as construed, whereas practically

the original consensus will be enforced instead of the written agreement. In other

words, the meaning of the written agreement is replaced with an intention of the

parties that the document itself did not demonstrate. This relates very closely to the

essence of rectification.151

Nevertheless, the difference between interpretation (common law) and rectification

(equity) has recently been underlined by Lord Neuberger in Marley v Rawlings:152

If it is a question of interpretation, then the document in question has, and has always had, the meaning and effect as determined by the court, and that is the end of the matter (…) If it is a question of rectification, then the document, as rectified, has a different meaning from that which it appears to have on its face, and the court would have jurisdiction to refuse rectification or to grant it on terms.153

This distinction has its roots in the English objective theory of contractual

interpretation, as stressed in Chartbrook.154 Consequently, pre-contractual

negotiations are excluded from any interpretative attempt. According to Lord

Hoffmann, statements in pre-contractual negotiations “will be ‘drenched in

subjectivity’, so that to look at them will undermine the court’s obligation to construe

the contract, and its background, in terms of the objective perception of the

reasonable observer.”155 Similarly, it is considered problematic to delete or insert an

entire page, while interpreting an agreement. Pre-contractual communications or extra

150 ibid [25]. 151 Richard Buxton, ‘”Construction” and Rectification after Chartbrook’, (2010) 69 Cambridge LJ 253, 256 –

258. 152 [2014] UKSC 2; [2014] 2 WLR 213. 153 ibid [40]. 154 Chartbrook (n 149) [33]. 155 ibid [38].

36

documents can therefore only be relied upon in rectification.156

4.3. Robin Rigg under review

After having discussed the issues surrounding ‘double obligations’ and ‘contractual

interpretation’, it is now time to zoom in on the Robin Rigg157 case. How do the

courts in this particular matter deal with identifying the precise extent of the

obligations imposed upon MTH?

With reference to the general introduction in Chapter 1, MTH contracted with E.ON

in 2006 for the design, fabrication and installation of the foundations for 60 wind

turbine generators for the Robin Rigg Offshore Wind Farm in the Solway Firth. After

completion of the works in February 2009, the grouted connections started to fail in

April 2010. This was due to an error in the international standard J101. Remedial

works had to be carried out costing the sum of €26.25 million. Meanwhile E.ON and

MTH were in dispute about the responsibility for the remedial work, with E.ON

alleging that MTH was in breach of ‘overriding fitness for purpose obligations.’ MTH

responded by saying that any fitness for purpose obligation was qualified by its duty

to comply with J101.

4.3.1. The reasoning of the High Court158

Edwards-Stuart J has divided his judgment into two parts; a) the construction of

the contract, and b) the design. Since his reasoning contains lots of references to

relevant contractual terms, these terms have been attached as Appendix II.

Furthermore, the precedence of the contractual documents is as follows:

i) the Form of Agreement (Part B);

ii) the Conditions of Contract (Part D) and the list of Definitions (Part C);

iii) the Commercial Schedules (Part E) and the Schedules of Prices, 156 Paul S. Davies, ‘Rectification versus Interpretation: The Nature and Scope of the Equitable Jurisdiction’,

(2016) 75 Cambridge LJ 62, 68. 157 Robin Rigg case (n 1). 158 [2014] EWHC 1088 (TCC), [2014] BLR 450.

37

Payment Profile and Draft Programme (Part L);

iv) the Employer’s Requirements (Part G, H, I (Technical Requirements), J

and K);

v) the Annexes to the Employer’s Requirements;

vi) Volume 2A, 2B, and 3 of the Contractor’s Tender Return (also known

as Part M).

When addressing the issue in relation to contractual interpretation, the judgment

shows that the parties disagree whether Clause 8.1. of the Conditions (Part D),

read in conjunction with Clauses 3.2.2.2. and 3b.5.1. of the Technical

Requirements (‘TR’) (Part I), expects MTH to deliver suitability in achieving a

service life of 20 years or merely reasonable skill and care in designing the

foundations on the basis of a 20 year design life in accordance with J101.159

With reference to Appendix II, the Clauses 3.2.2.2. and 3b.5.1. TR (Part I) both

“ensure a lifetime of 20 years”, whereas Clause 8.1. of the Conditions (Part D)

generally refers to ‘Good Industry Practice’. On this basis it was submitted by

Mr. Streatfeild-James (MTH) that “the effect would be that the 2 isolated

references to ‘ensure’ in general sections of the Specification would supersede all

the more detailed and specific references to ‘design life’. That cannot be

right.”160

But the High Court expressed a clear preference for Mr. Marrin’s (E.ON)

submission, placing emphasis on Clause 3.1. TR (Part I) and Clause 8.1. (x) of

the Conditions (Part D). Clause 3.1. TR first of all stresses that “(…) the

contractor shall assume full responsibility for design (…)”161 Clause 8.1. (x) of

the Conditions furthermore states that “(…) the Works as a whole shall be (…)

fit for its purpose as determined in accordance with the Specification using Good

Industry Practice.”162 According to Mr. Marrin, the ‘purpose’ of the works

should be determined from the TR (since Clause 8.1. (x) of the Conditions 159 ibid [61]. 160 ibid [65]. 161 ibid [25]. 162 ibid [23].

38

mentions ‘Specification’, which should be seen as a reference to the Employer’s

Requirements containing the TR). The reference to ‘Good Industry Practice’ did

not, in Mr. Marrin’s view, qualify the obligation as to fitness for purpose. Mr.

Streatfeild-James argued the opposite, that “it was the ‘fitness for purpose’ that

was to be determined using Good Industry Practice.”163

Interestingly, Clause 3.1. TR also addresses the fact that the Technical

Requirements of Part I “are the MINIMUM requirements of the Employer to be

taken into account in the design.”164 In that respect Clause 3.2.2.2. TR prescribes

that the foundations require a design according to the J101 standard.165 It appears

therefore that J101 should be treated as an employer’s specification. Edwards-

Stuart J acknowledges this possibility and states subsequently that the Canadian

decisions in Greater Vancouver166 and Steel Company167 are persuasive

authorities for the suggestion that “the existence of an express warranty of fitness

for purpose by the contractor can trump the obligation to comply with the

specification even though that specification may contain an error.”168

Furthermore, Edwards-Stuart J reiterates the principles of contractual

interpretation169 to reach the following conclusion that obligations of ‘reasonable

skill and care’ and ‘fitness for purpose’ can exist side by side and are not

mutually incompatible.170 Edwards-Stuart J considers the language of this

contract, especially Clause 3.2.2.2. TR, to be clear and unambiguous. There is no

inconsistency “with the other terms of the contract or with the intentions of the

parties as reflected by the Agreement as a whole.” Consequently, MTH

guaranteed that the foundations would have a service life of 20 years.171

163 ibid [66]. 164 ibid [25]. 165 ibid [26]. 166 Greater Vancouver (n 72). 167 Steel Company (n 81). 168 [2014] EWHC 1088 (TCC) (n 158) [74]. 169 ibid [75] – [76]. 170 ibid [77]. 171 ibid [80].

39

When addressing the issue in relation to the design, the judgment emphasises the

importance in this case of DNV being the author of the J101 standard, while also

being nominated under the contract as the certifying authority.172 Firstly,

Edwards-Stuart J establishes on the basis of expert evidence that the flaw in the

J101 standard “is not a matter that ought to have put a competent designer on

notice (…)”173 Designer Rambøll could not reasonably be expected to discover

the flaw.

Secondly, it is established by Edwards-Stuart J that MTH was not obliged to

provide test data regarding the use of shear keys (Clause 10.5.1 TR), since

MTH’s tender excluded the use of shear keys and E.ON had accepted the tender.

Therefore, MTH’s obligation was to design the foundations in accordance with

J101 and exercise reasonable skill and care.174

Furthermore, the question whether Rambøll should have carried out tests or a

finite element analysis regarding the conservative assumption that axial load and

bending moment did not interact (paragraph A202 of J101), was answered

negatively. On the basis of Professor Schaumann’s evidence it was accepted that

in situations where “the certifying body shares or makes the same assumption,

then the designer would have satisfied the requirement (…)”175 As DNV was part

of a respectable school of thought in the offshore wind turbine industry

underlining Rambøll’s conservative approach assessing the axial load and the

bending moment separately, Rambøll did not have to do any more.176

Similarly, Professor Schaumann’s evidence was used to establish that, although

Rambøll did not carry out any form of evaluation of the actual grouted

connection (the guidance note to paragraph B101 of J101), any check would

have made no difference to the design of the grouted connections.177 Equally, it

172 ibid [116]. 173 ibid [86]. 174 ibid [114]. 175 ibid [125]. 176 ibid [129], [130]. 177 ibid [140], [141].

40

was decided on the basis of expert evidence that the requirement for

experimental verification (paragraph D101 of J101) was aimed at the body

concerned with the verification of the design. Since DNV did not desire

verification of Rambøll’s grouted connection, this indicates that DNV considered

that sufficient documentation was available of that behaviour.178

4.3.2. The reasoning of the Court of Appeal179

Turning now to Part 5 (‘the legal principles’) of the Court of Appeal’s judgment,

Jackson LJ acknowledges the Canadian (persuasive) authorities and states that

construction contracts “may impose a double obligation upon the contractor.”180

Jackson LJ then refers to the principles of contractual interpretation in order to

decide whether the contract between E.ON and MTH imposes a double

obligation.181

Interestingly, Jackson LJ refers to Lord Collins’ concurring judgement in Re

Sigma182 as part of the iterative process:183

In complex documents of the kind in issue here there are bound to be ambiguities, infelicities and inconsistencies. An over-literal interpretation of one provision without regard to the whole may distort or frustrate the commercial purpose.184

Jackson LJ combines this judgment of Lord Collins with Lord Clarke’s

observation in Rainy Sky185 concerning ‘business common sense’.186 According

to Jackson LJ “the court must consider what [a reasonable person] X would have

understood clause 8.1 of the conditions and TR paragraph 3.2.2.2 (2) to mean.”

178 ibid [151], [152]. 179 [2015] EWCA Civ 407, [2015] BLR 431. 180 ibid [79]. 181 ibid [80]. 182 Re Sigma (n 125). 183 [2015] EWCA Civ 407 (n 179) [84]. 184 Re Sigma (n 125) [35]. 185 Rainy Sky (n 132). 186 ibid [21].

41

And also that “there are likely to be ambiguities and inconsistencies within the

documents. It must not allow itself to be led astray by those ambiguities and

inconsistencies.”187

In the following Part 6 (‘decision on MTH’s appeal) of the Court of Appeal’s

judgement, Jackson LJ establishes that the second part of Clause 3.2.2.2 TR,

ensuring a lifetime of 20 years, “at first sight (…) is a warranty that the

foundations will function for 20 years.”188 But comparing this provision with

other provisions in the TR, it appears that the TR incorporates many stipulations

regarding a design life of 20 years. According to Jackson LJ, “if a structure has a

design life of 20 years, that does not mean that inevitably it will function for 20

years, although it probably will.”189 Jackson LJ combines the first part of Clause

3.2.2.2 TR with Clause 8.1 (iv), which requires the contractor to comply with

J101; a guideline for offshore structures with a design life of 20 years.190

Jackson LJ further acknowledges that both Clause 3.2.2.2 (2) and Clause 3b.5.1.

TR ensure a lifetime of 20 years, but he is questioning these clauses as part of the

TR and J101 by stating:

If the contractor was really required to produce a guaranteed operational life of 20 years, the rest of the TR and J101 (even absent any error in respect of δ) would not be the right way to set about the task.191 As Mr Streatfeild-James points out, if the contract required an absolute warranty of quality, one would expect to see it in clause 8.1, not tucked away in the Technical Requirements. The TR are a detailed document which comes fourth in the order of precedence.192

Regarding Clause 8.1 (x) of the Conditions Jackson LJ observes that ‘Good

Industry Practice’ is defined in the List of Definitions and relates to reasonable

skill and care as well as compliance with J101. The words ‘fit for purpose’ are 187 [2015] EWCA Civ 407 (n 179) [87]. 188 ibid [90]. 189 ibid [91]. 190 ibid [92]. 191 ibid [95]. 192 ibid [97].

42

equally defined in the List of Definitions and refer to the Employer’s

Requirements (i.e. the TR and J101).193 Accordingly Jackson LJ concludes that:

A reasonable person in the position of E.ON and MTH would know that the normal standard required in the construction of offshore wind farms was compliance with J101 and that such compliance was expected, but not absolutely guaranteed, to produce a life of 20 years.194 TR paragraphs 3.2.2.2 (2) and 3b.5.1 are inconsistent with the remainder of the TR and J101. They are too slender a thread upon which to hang a finding that MTH gave a warranty of 20 years life for the foundations (…) Clause 8.1 does not contain any warranty that the foundations will have a 20 year life.195

Jackson LJ continues his judgment by addressing the issue in relation to the

design. With respect to Clause 10.5.1 TR he states very clearly that “MTH

should have carried out appropriate tests and submitted the resulting data to the

Engineer and the Certifying Authority.”196 Similarly, Jackson LJ disagrees with

the High Court’s view on paragraph D101 of J101, which “is directed to the

designer, in this case MTH acting through Rambøll.”197 This provision is

identical to Clause 10.5.1 TR in prescribing ‘experimental verification’, but

regarding both provisions Jackson LJ concludes that “this court should not

interfere with those findings (…) the Court of Appeal is always slow to overturn

findings of fact on technical issues made by TCC judges.”198 Therefore, it is

decided that testing would not have changed the situation surrounding the

foundation defects. According to Underhill LJ, “Prof Schaumann was expressing

real doubt as to whether testing of the kind hypothesised would have revealed the

problem (…) thus afforded a clear evidential basis for the Judge’s conclusion.”199

193 ibid [101] – [103]. 194 ibid [104]. 195 ibid [106]. 196 ibid [122]. 197 ibid [133]. 198 ibid [128]. 199 ibid [145], [146].

43

4.4. Discussion

When comparing the two judgments in Robin Rigg, a profoundly different attitude

towards contractual interpretation is revealed. Where it may be said that the High

Court follows the ‘primacy of the language’, the Court of Appeal seems to favour the

more contextual approach. Consequently, the High Court identifies MTH’s design

obligation as one of (express) suitability, whereas the Court of Appeal defines it as

being one of reasonable skill and care (considering the contract as a whole to

outweigh the language of certain express terms). Similar results were reached in

Greater Vancouver200 and Steel Company201, as previously discussed in section 3.4.

of this dissertation. It might be suggested, therefore, that a pattern is emerging.

Whenever the courts allow themselves to interpret the contract beyond the plain

language, the chance of express terms being acknowledged as freestanding warranties

of suitability appears to decrease.

Generally it seems a struggle for the courts to decide how to handle the language of

the contract in question. Unambiguous language should be respected at all times,202

even when the outcome is supposedly disadvantageous to one of the parties.203 But, as

the Court of Appeal has clearly underlined in Robin Rigg, an over-literal

interpretation could prevent the courts from discovering the commercial purpose and,

subsequently, the intention of the parties.204 This discrepancy indicates that there is

no real consensus concerning the importance of the background knowledge or

‘commercial common sense’. It could therefore be the case that Lord Neuberger was

genuinely trying to take a stance in favour of the literal approach in the recent Arnold

v Britton205 case.

Admittedly, the express terms relied on by E.ON in Robin Rigg were to be found in

the Technical Requirements (‘TR’). It is questionable, however, if any crucial

200 Greater Vancouver (n 72). 201 Steel Company (n 81). 202 See Sugarman (n 138). 203 See Peel (ed) (n 139). 204 See Re Sigma (n 184). 205 Arnold v Britton (n 140) [17] – [20].

44

importance should be given to the fact that no express warranties of suitability were

present in the Conditions themselves. Jackson LJ would expect such warranties to be

mentioned in the Conditions and not in a document like the TR (coming fourth in the

order of precedence). Despite Jackson LJ’s view, the reference from the Conditions to

the TR was unambiguous as well as the language used in the two provisions ensuring

a lifetime of 20 years. As Edwards-Stuart J clearly mentioned, “this is not one of

those cases where the court is being asked to choose between two available meanings

of the words used.”206 Similarly, the factual matrix showed no indication of the

contracting parties being against an express suitability upon MTH. Perhaps the pre-

contractual circumstances could have provided useful information in this respect. Pre-

contractual information could have also conceivably confirmed E.ON’s explicit wish

of granting MTH the design and build contract under the absolute obligation that the

works as a whole would be fit for a service life of 20 years. As stated by Edwards-

Stuart J, “whether or not that was the subject of a conscious decision in this case we

do not know.”207

Even though a contextual approach seems to have the benefit of serving the parties

and their expectations,208 in this particular matter it is argued by John Hughes D’Aeth

that “the inadequacy of J101 weighed heavily on the court’s mind. It evidently had

considerable sympathy for the contractor and was anxious to find in the contractor’s

favour if possible.”209 This assumption may be a possible explanation for the Court of

Appeal’s ultimate conclusion that “the contract properly construed did not contain a

warranty for 20 years service life.”210 But it is clear that the Court of Appeal’s

judgment did not satisfy many commentators, since referencing from general

obligations to more detailed requirements in other parts of the contract is standard

practice.211 As Michael Sergeant has illustrated most accurately:

206 [2014] EWHC 1088 (TCC) (n 158) [80]. 207 ibid [79]. 208 See Golden and Thomas, ‘The Spearin Doctrine’ (n 110). 209 John Hughes D’Aeth, ‘Design defects in offshore wind turbines: it’s an ill wind…’, (Berwin Leighton

Paisner, 20 May 2015, 1) <https://www.blplaw.com/expert-legal-insights/articles/design-defects-offshore-wind-

turbines-ill-wind/> accessed 18 July 2016. 210 [2015] EWCA Civ 407 (n 179) [141]. 211 Lupton, ‘Design Liability’ (n 8) 107.

45

One of the weaknesses with this iterative approach is that it is premised on the assumption that the process of interpretation is designed to resolve inconsistencies within the contract documents (…) But Hojgaard did not involve directly contradictory provisions.212

This immediately brings to mind Lord Neuberger’s ‘stance’ in Arnold v Britton.213 In

short, if the meaning of the language is not open to question, a court should refrain

itself from re-writing the contract.214

Returning now to the pattern identified earlier, it seems to be considerably problematic

for practitioners, especially drafters, acting in the construction industry that the courts

could possibly ignore parties’ reliance on express terms. Even in situations where

freestanding warranties of suitability have consciously been incorporated in a contract,

the courts could decide that the contract as a whole is inconsistent and surpass the

plain language of the contract. This development has been adding uncertainty to the

existing difficulties surrounding double obligations imposed on contractors and the

proper drafting of express terms.

The main question to be answered by the Supreme Court in the Robin Rigg case,

therefore, is under which circumstances courts are allowed to interpret the contract

beyond the plain language. Or to put it differently, where should the literal approach

end and should the contextual approach begin? And how would the Supreme Court in

that respect understand Lord Neuberger’s comments in Arnold v Britton?

While at this stage it seems almost impossible to predict a possible outcome, it may be

said that the Court of Appeal seemed all too eager to leave the literal approach and

apply the contextual approach. Following Lord Neuberger’s comments it is fairly

suggested that courts should stay with the written text as long as possible.

Furthermore, the Court of Appeal appears to be using the iterative process as a means

of identifying ‘design life’ and ‘service life’ as rivalling concepts in the contract,

considering the presence of ‘service life’ as being inconsistent with the contract as a 212 Michael Sergeant, ‘Kitchen sink drafting style under scrutiny’, (2015) 26 7 Cons Law 20, 22. 213 Arnold v Britton (n 140). 214 ibid [20].

46

whole.215 It may be said, however, that the presence of two different concepts in a

contract, one of which is expressing a guarantee, should reasonably be regarded as

evidence of a double obligation imposed upon the contractor. It is suggested, with

respect, that the courts should not use the iterative process as a balancing test.

Since the Court of Appeal decided to leave the literal approach and apply a contextual

approach to the contract, it may also be said that the Court of Appeal practically

corrected the meaning of the written text.216 Although it seems understandable for any

court wanting to construe an agreement to the best of their capabilities, after

construction by the Court of Appeal the contract between E.ON and MTH had a

different meaning from that which it appears to have on its face.217 No contractual

effect was given to the two provisions ensuring a ‘service life’ of 20 years. Instead of

relying solely on the iterative process to discover the parties’ expectations, it would

have been a worthwhile exercise in this particular matter, being on the cusp of

rectification, to include pre-contractual communications. As suggested before, it could

conceivably be the case that the two provisions ensuring a ‘service life’ were

purposely incorporated by the drafters on behalf of E.ON and should not have been

dismissed as inconsistent by the Court of Appeal.

Finally, the Court of Appeal’s view on the topic of appropriate testing and

experimental verification by MTH was very decisive, as the contract explicitly called

for test data. Neither the High Court nor the Court of Appeal’s judgment, surprisingly,

addresses the case law concerning ‘novel design’ (as discussed in section 2.5. of this

dissertation). It would have been expected in a case like Robin Rigg to underline the

general necessity of extra safety measures and appropriate testing.

215 D’Aeth, ‘Design defects in offshore wind turbines’ (n 209) 2. 216 See Buxton, ‘”Construction” and Rectification after Chartbrook’ (n 151). 217 See section 4.2. Boundaries of Interpretation.

47

5. Conclusion

Overall, this dissertation has brought together two important legal issues through a

comparative analysis of Canadian, US and English case law. The possibility has been

identified of construction contracts containing double obligations with regard to design

liability. Imposing ‘reasonable skill and care’ and ‘fitness for purpose’ (suitability) duties

upon contractors via the instrument of express terms, has been acknowledged as ‘common

practice’ by legal authorities. Such double obligations are considered to be mutually

compatible.218

While design and build contractors are believed to carry the responsibility for design

defects by way of an implied suitability obligation,219 it will depend on the employer’s

actual reliance on the contractor’s skill and judgment whether a strict duty to accomplish a

certain outcome can be expected.220 If reliance is absent, and there are no express terms

imposing ‘fitness for purpose’ upon the contractor, the contractor’s obligation will consist

of ‘reasonable skill and care’ (the default position of the ordinary, competent

professional). Therefore, the general consensus in the case law is that, without any express

or implied warranties, defects caused by an employer’s specification are not the

responsibility of the contractor.221

Due to their overriding qualities and capability to act as freestanding warranties of

suitability,222 express terms are a preferred tool for employers and are used extensively in

construction contracts. Contractors could, for instance, expressly be obliged to use ‘good

industry practice’ during the execution of the works, while having to guarantee that the

works as a whole will be fit for the intended purpose. The Robin Rigg223 case is a perfect

example of that.

Although the intention of the contracting parties might have been to insert certain express

218 See Edwards-Stuart J in the Robin Rigg case (n 170). 219 See IBA case (n 57). 220 See Marshall, ‘Design liability in English law’ (n 35). 221 See Little (n 71). 222 See Scheibel, ‘Understanding Construction Warranties in Canada’ (n 93). 223 Robin Rigg case (n 1).

48

suitability obligations into the agreement, that intention may not necessarily be

acknowledged by the courts when considering the precise extent of the duties. In that

respect a pattern has been identified from the case law in relation to contractual

interpretation; whenever the courts allow themselves to interpret the contract beyond the

plain language of the contract, the chance of express terms being acknowledged as

freestanding warranties of suitability appears to decrease. As a result, the contextual

approach, which generally seems to have the benefit of serving the parties and their

expectations,224 regularly causes courts to decide that the contract as a whole is

inconsistent. This would then lead to a judgment on the basis of which no contractual

effect is given to the express suitability provisions, as was the case in Robin Rigg.

Despite the fact that the principles of contractual interpretation (‘Hoffmann Principles’)

clearly emphasise the ‘primacy of the language’, they have not been able to clarify under

which circumstances courts should interpret the contract beyond the plain language. In

theory courts should at least respect unambiguous and clear language, whether or not the

outcome is commercially disadvantageous to one of the parties.225 In practice, however,

courts could deviate when an over-literal interpretation may distort or frustrate the

commercial purpose.226 There even seems to be some confusion as to the proper

application of the iterative process, as mentioned by Lord Mance in Re Sigma.227

Since the courts’ choice between either a literal or a contextual approach affects the

mutual compatibility of double obligations in construction contracts, it is of the utmost

importance that the Supreme Court Justices take a unified stance as to what extent the

literal approach should be followed. If the Justices were to favour a literal approach unless

the words are obviously mistaken/clearly wrong, then this dissertation argues that the

judgment of the Court of Appeal in Robin Rigg should be overturned. Without sufficient

clarity it will stay uncertain for practitioners, more importantly drafters, as well as for

contracting parties themselves whether their express suitability provisions will hold in

court.

224 See Golden and Thomas, ‘The Spearin Doctrine’ (n 114). 225 See Sugarman (n 138) and Peel (ed) (n 139). 226 See Re Sigma (n 184). 227 See Re Sigma (n 126).

49

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TABLES OF STATUTES AND CASES

Table of Statutes

Sale and Supply of Goods Act 1994

Sale of Goods Act 1979, s 14

Supply of Goods and Services Act 1982, s 4 and 13

Table of Cases

UK

Antaios Cia Naviera SA v Salen Rederierna AD (The Antaios) [1985] AC 191 (HL)

Arnold v Britton [2015] UKSC 36; [2015] AC 1619

BCCI v Ali [2001] UKHL 8; [2002] 1 AC 251

Bolam v Friern Hospital Management Committee [1957] 1 WLR 582 (QB)

Chartbrook Ltd v Persimmon Ltd [2009] UKHL 38; [2009] 1 AC 1101

Eckersley & Others v Binnie & Partners & Others [1988] 18 Con LR 1 (CA)

G.H. Myers & Co v Brent Cross Service Co [1934] 1 KB 46 (KB)

Greaves & Co (Contractors) Ltd v Baynham Meikle & Partners [1975] 1 WLR 1095 (CA)

Holland Hannen and Cubitts (Northern) Ltd v Welsh Health Technical Services Organisation

[1985] 35 BLR 1 (CA)

Homburg Houtimport BV v Agrosin Private Ltd (The Starsin) [2003] UKHL 12; [2004] 1 AC

715

53

Independent Broadcasting Authority v EMI Electronics Ltd and BICC Construction Ltd

[1980] 14 BLR 1 (HL)

Investors Compensation Scheme v West Bromwich Building Society [1998] 1 WLR 896 (HL)

Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd [1997] AC 749 (HL)

Marley v Rawlings [2014] UKSC 2; [2014] 2 WLR 213

MT Højgaard A/S v E.ON Climate and Renewables UK Robin Rigg East Ltd, E.ON Climate

and Renewables UK Robin Rigg West Ltd [2014] EWHC 1088 (TCC), [2014] BLR 450;

[2015] EWCA Civ 407, [2015] BLR 431

Napier Park European Credit Opportunities Fund Ltd v Harbourmaster Pro-Rata CLO BV

[2014] EWCA Civ 984

Rainy Sky SA v Kookmin Bank [2011] UKSC 50; [2011] 1 WLR 2900

Re Sigma Finance Corporation (In Administration) [2009] UKSC 2; [2010] 1 ALL ER 571

Sans Souci Ltd v VRL Services Ltd [2012] UKPC 6

Sugarman v CJS Investments LLP [2014] EWCA Civ 1239; [2015] 1 BCLC 1

Trebor Bassett Holdings Ltd v ADT Fire and Security plc [2011] EWHC 1936 (TCC), [2011]

BLR 661; [2012] EWCA Civ 1158, [2012] BLR 441

Try Build Ltd v Invicta Leisure Tennis Ltd [1997] 71 Con LR 140 (QB)

Young & Marten [1969] 1 AC 454 (HL)

Canada

BG Checo v BC Hydro [1993] 1 SCR 12 (SC)

54

Greater Vancouver Water District v North American Pipe & Steel Ltd and Moody

International Ltd [2012] CarswellBC 2410, [2012] BCCA 337, [2012] 11 WWR 271, [2012]

BCWLD 6299, 13 CLR (4th) 176 (CA)

Little v North Columbia Construction Ltd [2015] CarswellBC 3817, [2015] BCSC 2441,

[2016] BCWLD 1373, 262 ACWS (3d) 355 (SC)

The Steel Company of Canada Ltd v Willand Management Ltd [1966] CarswellOnt 62, [1966]

1 SCR 746, 58 DLR (2d) 595 (SC)

US

AAB Joint Venture v United States, [2007] 75 Fed. Cl. 414

Blake Construction Company v United States, [1993] 987 F.2d 743

Greenbriar Digging Service Limited Partnership v South Central Water Association Inc., No.

3:07CV601 DPJ-JCS, [2009] WL812241 (S.D. Miss. Mar. 26, 2009)

Helene Curtis Industries Inc v United States, [1963] 312 F.2d 774

MacKnight Flintic Stone v City of New York [1899] 160 NY 12

United States v Spearin, [1918] 248 U.S. 132 (SC)

Other

Bevan Investments Ltd v Blackhall and Struthers [1979] 11 BLR 78; [1978] 2 NZLR 97 (CA)