Ove Arup & Partners International Ltd & Anor v Mirant Asia-Pacific Construction (Hong Kong) Ltd & Anor

A foundation designer proceeding on an unverified ground assumption must ensure that sufficient further information is obtained and fed back into the design process. The extent of verification depends on what reasonably competent design requires. It may require systematic geological investigation and mapping, rather than routine surface inspection. Contractual provisions for site supervision or approval of formations do not, without clear wording, replace or reduce the underlying design duty. Perfect knowledge of ground conditions is unnecessary, but reasonable verification is required. On an appeal concerning complex technical factual findings, substantial appellate restraint is appropriate. Intervention requires a material and important misjudgement or a palpably incompetent decision.

Mirant claimed damages from Arup after two power-station foundations settled during construction. The Technology and Construction Court, presided over by HH Judge Toulmin CMG, QC, found Arup in breach of the design agreement for failing to design with due care and skill and to verify the bearing-capacity assumption underlying the design. It rejected allegations of breach under the separate ground investigation agreement. The judgment is reported at [2004] EWHC 1750 (TCC).

Arup appealed against the findings on design duty, breach and causation. Mirant brought an academic cross-appeal concerning the ground investigation agreement. The central issues were whether the design agreement required verification of the assumed 3MPa bearing capacity, whether the work undertaken amounted to verification, and whether the breach caused the foundation failures.

Lord Justice May gave the judgment of the court. Lord Justices Richards and Mummery agreed.

1. The appeal was dismissed. The cross-appeal was academic once the principal appeal failed.
2. Arup’s design agreement required the exercise of the skill and care of ordinarily competent engineers. A competent foundation design required sufficient knowledge of ground conditions to determine a safe bearing capacity. An engineer could proceed initially on assumptions, but had to ensure that the necessary additional information was obtained, inform the client of that need, and normally ensure that the information was returned for evaluation. An express warning or disclaimer would be required before leaving the matter entirely to the client.
3. The extent of verification was fact-sensitive. Perfect and complete knowledge of the ground was unnecessary, but this case required detailed and systematic geological investigation and mapping. A rough surface inspection at formation level was insufficient.
4. The omitted technical site supervision provisions did not encompass verification of the foundation design assumption, and their omission did not reduce Arup’s obligations as designers. Similarly, the ground investigation agreement’s reference to approving ground conditions concerned site supervision and did not replace the design duty. The drawing note requiring foundations to be placed on unfractured rock was an instruction to the contractor, not a discharge of Arup’s verification obligation.
5. The activities undertaken by Mr Manning and Mr Pascall under the ground investigation agreement were different in kind from the required design verification. Mr Pascall was not personally negligent, but his inspection did not satisfy Arup’s separate contractual obligation.
6. The court upheld the trial judge’s causation findings. The 1997 investigations provided sufficient evidence that the foundations rested on weak in-situ ground, and the judge was entitled to reject fill and relevant post-inspection blasting as causes. A trial judge need not reconcile every evidential strand where entitled to choose the more persuasive account. Professor Hudson’s explanatory theory was an unnecessary coda rather than an evidential prerequisite.
7. The specialist judge’s factual findings in this complex technical case were not shown to be palpably incompetent or vitiated by a sufficiently important misjudgement. They were therefore not amenable to appellate interference.

• Court of Appeal (Civil Division): On 21 December 2005, the court dismissed Arup’s appeal and treated Mirant’s cross-appeal as academic. [2005] EWCA Civ 1585
• Technology and Construction Court: HH Judge Toulmin CMG, QC, found breach of the design agreement but no breach of the ground investigation agreement. [2004] EWHC 1750 (TCC)
• Earlier Court of Appeal stage: The court had previously determined preliminary contractual issues, including that the design agreement did not incorporate the FIDIC terms while the ground investigation agreement did. [2003] EWCA Civ 1729