Defining design life: The importance of precision

The English High Court recently issued a decision in Blackpool Borough Council v Volkerfitzpatrick Ltd and others [2020] EWHC 1523 (TCC) on the meaning and ramifications of ‘design life’ requirements under English law. 

The case is unusual in considering the implications where different design lives are specified for different parts of the works. It also highlights the interaction between the design life requirements imposed on a contractor, and the design maintenance obligations imposed on an employer, meaning that these need to be read together when considering what, if anything, is guaranteed by a certain ‘design life’.

Factual background

In 2009, Blackpool Borough Council (the “Claimant”) retained Volkerfitzpatrick Limited (the “First Defendant”) to construct a publically funded, modernised tram depot at Starr Gate, close to the Irish Sea, which was intended to be a landmark building ( the “Tram Depot”).  In connection with this, the  parties entered a modified form of the NEC3 standard form design and build contract (the “Contract”).

The First Defendant and its subcontractors (the second to fourth defendants, together with the First Defendant the “Defendants”) began construction in 2009, completion was reached in 2011, and the  Tram Depot began operation in 2012.  However, In January 2015, a large section of the roof of the Tram Depot became detached during high winds. 

The Defendants initially carried out remedial works at their own expense; but, following further inspections, the Claimant claimed to have identified a further issue.  It said that the steel components in the roof space of the Tram Depot had lost their galvanized coating and were corroded to a significantly greater extent than should have been seen after four years of operational life.

The Claimant, therefore, commenced an action against the Defendants before the Technology and Construction Court (a division of the English High Court), seeking damages of approximately £6.7 million for the cost of remedial works.  It alleged these costs would not have been incurred if the  relevant parts of the Tram Depot had met their intended design life, which the Claimants suggested was 50 years.  The Defendants resisted this claim.

Crux of the dispute

There were two crucial points in dispute between the parties::

1. What design life has been specified for the relevant components; and
2. To what extent was the corrosion at issue caused by a flaw in design, as opposed to a failure by the Claimant to properly maintain the Tram Depot?

The Claimant argued that each of the relevant components of the works (the galvanised steel cold formed components connecting the wall and roof sections to the portal frame; the galvanised steel internal components of the roof; the wall cladding panels; the soffit panels; decorative wall cladding; and the tram access doors; side panels and supports) were part of the “building structure” and were, therefore, required to have a design life of 50 years under the Functional Procurement Specification.  Given the extent of corrosion which was already visible, the Claimants submitted that the Defendants had breached their design obligations in respect to these.

The Defendants denied that these components were part of the “building structure”, noting that none of the components in question were load bearing, and therefore denied that the relevant design life was 50 years.  Instead, the Defendants argued that the wall cladding formed part of the “external shell”, which was required to have a 25-year design life under the design log, and that all other parts were only required to have a 20-year design life, being the default design life under the Contract where no specific provision had been made.

In light of this, and given the uncertainty regarding the extent to which the Claimants failure to carry out recommended maintenance had contributed to the corrosion, the Defendants submitted that the Claimants had failed to prove that any of the components did not meet the specified design life.

The Court’s decision

The Court accepted key parts of the Defendant’s submissions on the scope and meaning of the design life requirements in the Contract.  In particular:

1. Scope of design life obligation

The Court noted, with respect to the reference to “building structure”, that:

“it is not so easy to identify which individual elements within a building fall within its ambit, particularly in the context of more modern structures such as a portal frame structure such as the tram depot. Reference to the ordinary or common meaning of the phrase cannot answer the question. … In the context of a modern steel framed building such as the tram depot there can be no dispute that the primary streel structural frame is part of the building structure. However, in my view it is neither plain nor obvious whether or not the secondary steel structures, such as the purlins and cladding rails, are also part of the building structure.”

Ultimately, the Court found that none of the components in question formed part of the “building structure” and, as such, none were required to have a design life of 50 years.  Instead, the Court concluded that each of the galvanised steel components, claddings and soffit panels formed part of the “external shell” with a 25-year design life, and that the tram doors, side panels and supports were subject to the default 20-year design life requirement.

1. Meaning of design life obligation

As regards the meaning of a design life obligation, the Court observed, in the absence of a definition in the Contract, that:

“It cannot realistically be thought that a structure should be intended to be maintenance free for the whole of its design life, whereas it can reasonably be assumed that it ought not to need major repairs over that period. … Thus, the distinction lies between anticipated maintenance and major repair. That is, of course, a question of fact and degree in any given case.”  

On this basis, and given the design maintenance obligations specified in the Contract, the Court found that the design life requirements would only be breached if the Claimant was required to carry out maintenance which was “non-standard” or “unusually onerous” when compared with normal construction and maintenance requirements applicable to works of a similar character.

In light of this, while the Court found that some of parts of the Tram Depot did require remedial works in order to perform their required function for their design life, it concluded that the Claimant had failed to prove its case in relation to other components.  As a result, it awarded just £1.1 million in damages; significantly less than the £6.7 million claimed.

Conclusion

This case highlights the importance of parties clearly defining both the scope and the meaning of contractual design life requirements in construction contracts.  If possible, the work covered should not only be identified by general phrases such as “building structure”, but also by reference to the specification or architectural drawings to provide both parties with certainty as to the design life of different parts of the works.  General terms such as ‘building structure’ or similar may be used as a sweep up provision to capture elements which have not been specified but should be followed by “including …..” and then refer to the drawings, specifications as required.  Further, the parties should make clear what level of maintenance is expected as normal maintenance will not by itself be proof that the design life was not achieved..

If you have any questions on design life requirements, the interaction between these and design maintenance requirements or any other issues raised by this decision, please do not hesitate to get in touch with a member of our team.