Energy Firm Can Claim Over Glendoe Accident

An energy firm has won a legal battle to pursue a pounds 130 million claim against a contractor after a tunnel collapse halted generation at a new hydro-electric scheme.

The renewable electricity company SSE Generation launched the compensation claim against Hochtief Solutions and Hochtief (UK) Constructions following problems at the Glendoe site near Fort Augustus in the Highlands.

SSE is seeking to recover £130 million which it claims is the loss it sustained because of the collapse in 2009. It has also made an alternative claim for £102 million.

Hochtief is counterclaiming for almost pounds 10 million in the action at the Court of Session in Edinburgh over the profit it would have made if it carried out the remedial works along with the cost of investigating the collapse.

Another contractor was brought in in 2010 to carry out work following the collapse, which lasted two years.

Hochtief had maintained that SSE was barred from bringing the proceedings and should have made a claim on a joint names insurance policy. It also argued that some parts of the claim should be deleted ahead of an evidential hearing in the action.

But a judge held in a decision issued today that SSE was not barred from bringing any part of the case.

Lord Woolman concluded that the provision for joint names insurance did not displace liability under an engineering and construction contract.

Hochtief undertook to design and build the hydro scheme in a £125.9 million contract for am underground powerhouse, dam, reservoir, two tunnels and linked works at Glendoe in the Great Glen Fault area.

The scheme was due to be officially opened by the Queen on June 29 in 2009 but on the day of the opening ceremony generated a "fail to start" message.

In August the plant did not run normally and it was shut down and subsequent investigations found a significant blockage.

In the action SSE put forward various grounds including that Hochtief failed to classify the rock mass and install support in accordance with works information and failed to implement the contractual design for tunnel support.

The contractor contests the claims. Hochtief maintains that the tunnel collapse was "an employer's risk event".

The action called before Lord Woolman to deal with a preliminary point over insurance.

The judge said: "There is no irrebuttable presumption that they have no liability to one another simply because a joint names policy is in place."

"That would tend to merge the law of insurance with the law of contractual interpretation," he said.

The judge said he would fix a further hearing to consider future procedure in the commercial court action.