Energy firm SSE has won an appeal in a case that involves over £100 million in damages for the collapse of a tunnel in 2009 at the Glendoe hydroelectric project in Fort Augustus, Scotland.
The Inner House of the Court of Session, in a majority two to one verdict, allowed a reclaiming motion by SSE Generation against a Commercial Court ruling that contractor Hochtief Solutions AG was not liable for the collapse, although SSE was awarded £1 million by the judge at that stage for the period during which the scheme was not operating. Two of the three residing judges ruled that SSE should be awarded more than £107 million for the project along with a £1 million in damages, as well as interest.
“SSE welcomes the positive decision of the Court of Session today concerning the tunnel collapse at our Glendoe Hydro Scheme near Fort Augustus,” commented Martin Pibworth, Wholesale Director, SSE. “The Hydro Scheme had to be shut down for nearly three years whilst rectification works resulting from a defect which existed prior to take over of the scheme by SSE were carried out. Since its re-opening in 2012, Glendoe has been making an important contribution to Britain’s electricity supply.”
Built between 2006 and 2009, Glendoe was the largest hydroelectric plant to be developed in Scotland for more than half a century. Barely eight months after generation began, the project had to be shut down following a collapse in its headrace tunnel in August 2009. The structural failure in the tunnel happened near the top end of the headrace, where it is fed from the reservoir.
The project involved construction of more than 16km of tunnels, mostly by drill and blast but the 6.2km long headrace between the powerhouse and reservoir area was bored by TBM. Geology along the tunnels is hard rock – schist and quartzite, with minor faults. Lining support comprised bolts, steel ribs, mesh and shotcrete, used as required.
The extent of tunnel repairs eventually undertaken being more extensive than expected when investigations began into the blockage in the upper headrace tunnel. No equipment repairs were required as a result of the tunnel collapse.
In the end, a bypass tunnel was constructed by contractors Royal BAM Group around the worst of the rockfall blockage and fault zone in the top half of the 6.2km long headrace blockage area. A second bypass tunnel was constructed around the power cavern to provide access from the downstream side to remove about half of the extensive debris pile, extending more than half a kilometre down the tunnel.
About half of the headrace tunnel was lined with shotcrete, and extra lining was installed in the tailrace tunnel in the latter stage of the remedial programme.
The project eventually began generation again in the summer of 2012.
In the original Commerial Court ruling, the judge ruled that Hochtief was not liable, as he believed the company had exercised “reasonable skill and care”. SSE appealed however and the case went to The Inner House of the Court of Session in front of the The Lord President, Lord Carloway, sitting with Lord Menzies and Lord Glennie.
Lord Menzies and Lord Glennie’s disagreed with the Lord President on whether the tunnel collapse was due to a defect which existed at takeover, with Lord Glennie concluding that the defence of having used reasonable skill and care to ensure that the design complied with the works information was not available to the contractor.
“I consider that the collapse of the tunnel was indeed due to a defect existing at takeover. Further, I consider that that defect was not due to the contractor’s design of the works but rather to the implementation of that design,” wrote Lord Glennie. “It follows from this, in my opinion, that the collapse of the tunnel was a contractor’s risk in terms of section 81.1 of the contract; and the defenders are liable to the pursuers for the costs of repairing the tunnel. On that basis I would allow the reclaiming motion.”
Lord Menzies said he was in agreement with Lord Glennie.
The Lord President said however that reasoning behind the commercial judge’s decisions was generally clear and concise.
The Lord President ruled to deny the reclaiming motion, but Lord Menzies and Lord Glennie ruled in favour, giving the majority verdict.