| Date | 16 August 2000 |
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| Judgment | ABB Power Construction Limited -v- Norwest Holst Engineering TCC 1 August 2000. |
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| The Issue | Defining works within the ambit of the Construction Act under Section 105 (2). |
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| Implication |
The Court will generally define exempt construction operations by reference to the nature of the project as a whole. |
printThe provisions of the Act which define its scope and intent have attracted much attention since it is now clear that the only apparent way of avoiding the effects of an adverse decision from an adjudicator is to demonstrate that the adjudicator did not have the necessary jurisdiction. Section 105 (1) of the Act defines in considerable detail the term "construction operations" for which the provisions of the Act apply. Section 105 (2) then goes on to exclude certain operations, such as: (a) drilling for, or extraction of, oil or natural gas (b) extraction of minerals, and (c) assembly, installation or demolition of plant or machinery on a site where the primary activity is nuclear processing, power generation or water or effluent treatment. These questions were carefully examined in a recent case between ABB Power Construction and Norwest Holst Engineering. ABB is the main contractor for three heat recovery steam generators as part of a project to extend an existing power station at Peterhead in Aberdeen. Norwest entered into a sub-contract for the pre-fabrication and installation of insulation to pipework, drums and various parts of the equipment. ABB argued that the insulation or cladding was for boilers, ducting, silencers, pipework, drums and tanks without which there would effectively be no plant at all. Without insulation to provide protection against internal heat of around 530 degrees centigrade, the boiler casings would disintegrate within days and would be too hot for anybody to approach safely. The insulation of all the equipment for the plant was necessary to ensure that the process in its entirety was safe, workable and efficient. Accordingly ABB argued the insulation works must be excluded from the ambit of the Act under Section 105 (2) (c ). The insulation was itself assembly, installation or demolition of plant or machinery for power generation. Norwest on the other hand argued that their works were clearly covered by Section 105 (1) and that they should be entitled to enjoy the safeguards brought about by the Construction Act. Moreover, Norwest argued that it was for ABB to demonstrate clearly that the work in question fell within the exclusions. Judge Humphrey Lloyd QC recognised that there was indeed certain oddities in the way in which the Act had been drafted. For example, the construction steelwork industry when carrying out work on a site where the primary activities is the production of pharmaceuticals, oil, gas, steel or food or drink, is exempt, but it enjoys no such privileges if the structure is primarily for the warehousing of food or drink. Similarly drilling for oil and gas is excluded but drilling for water (even if it is ultimately to be treated) is not. Again, a project for tunnelling to lay a sewer or to construct a railway has to be regulated but not a project requiring a tunnel for minerals. The list of difficulties seems endless. Installing plant for nuclear processing and power generation or for water and effluent treatment is excluded, but not plant for an incinerator. With his tongue firmly in his cheek, Judge Lloyd felt that one could only be impressed by the detail of the work done by officials of the DOE in briefing Parliament and the Ministers responsible prior to the laying down of the Act. They had plainly taken great care in selecting the construction operations that were to be exempt and in defining the circumstances where they might be found. In a further nod to the absurdity of some of these provisions, Judge Lloyd said "the wide immunity given to work in for example, the water, oil and gas industries must be seen as a tribute to them (and for all who carry out construction work for them), either for the absence of malaises which had been found to bedevil others, such as the prevalence of disputes and the presence of "pay when paid" clauses, or for the fact that the reforms required by the Act were not needed or had been carried out." Of course in reality the water, oil and gas industries have their fair share of construction disputes and many in those industries regret that the Construction Act does not apply to their work. They would gladly now be included. Moreover, whether the DOE (as it then was) were in a position properly to consider these exemptions must be doubted. It seems that the DTI has taken more interest historically in representing these sectors to Government. In conclusion however Judge Lloyd held that the exempt construction operations under Section 105 (2) should be defined by reference to the nature or aims of those responsible for promoting or implementing the project, rather than by reference to the many individual construction operations required. The words "assembly, installation ....... of plant" in Section 105 (2) therefore covered the provision of insulation and cladding to the pipework and boilers. The contract and sub-contract therefore fell within the definition of exclusions and Norwest were not entitled to an adjudication of their disputes with ABB.
CJ-0032
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