Power company SSE Generation has won a Court of Session appeal in its claim for more than £100m in compensation following the collapse of a tunnel at a hydro-electric scheme near Loch Ness.

A majority of the First Division (Lord Menzies and Lord Glennie, Lord President Carloway dissenting) ruled that the collapse at the scheme at Glen Doe, Fort Augustus was a contractor's risk in terms of the construction contract, and that the defenders, Hochtief Solutions AG, were liable for the bulk of the cost of building a second bypass tunnel.

The scheme involved a turbine situated between a reservoir formed in Glen Tarff, and the south eastern shore of Loch Ness. A 6.2km tunnel led from the reservoir to the turbine, and a further 1.9km tunnel from the turbine to the loch. The longer tunnel was built through a geological fault zone, and it was here that the collapse took place in April 2009, not long after the tunnel was completed. After the parties failed to reach agreement on liability for remedial works, the pursuers instructed other contractors to build a bypass tunnel, which cost as much as the initial price estimate for the whole tunnel works.

At first instance the commercial judge, Lord Woolman, held that the tunnel had collapsed because it did not have enough support where there were poor rock conditions, no defect had existed in the tunnel but that no defect had existed because of a contract term excluding the contractor's liability if they proved they used reasonable skill and care too ensure the design complied with the "works information". He accepted the defenders' contention that the design involved a "holistic joint process" whereby the parties agreed the condition of the rock, and the measures required to ensure adequate support for the tunnel, at the time of excavation and thereafter during a series of inspections prior to it being put into use.

In a 139 page opinion Lord Carloway held that the contract documents did not establish that all erodible rock required to be shotcreted, and it was only if there was a defect when the pursuers took over the tunnel that questions of exclusion arose. In any event the defenders had proved they used reasonable skill and care.

However Lord Menzies and Lord Glennie took the view that there had been a defect existing at takeover and that it was not due to the design but to the implementation of the design: the works information required a tunnel with a design life of 75 years. The defence of reasonable skill and care was therefore not available. "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", Lord Glennie stated.

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