When Is A Construction Contract Not A Construction Contract?

North Midland Construction plc v A E & E Lentjes UK Ltd

[2009] EWHC 1371 (TCC)

This recent case centred on whether certain works carried out at

two coal fired power stations fell within the ambit of the

Construction Act. A E & E Lentjes UK Ltd

("AEE") sub-contracted certain works to North Midland

Construction plc ("NMC"). The parties entered two

contracts for each power station – one for enabling works

and one for civil works. The enabling works consisted mainly

of preparatory works, such as securing the site, constructing

temporary roads, and installing temporary services. The civil

works involved heavier construction works, such as piling,

excavation and foundation earthing. Following a dispute over

the final account, NMC wanted to exercise its statutory right to

adjudicate under the Act, which it could only do if these contracts

were held to be "construction contracts" as defined in

the Act.

The Act applies to contracts for "construction

operations". These are defined in section 105(1) and

qualified by the exceptions under section 105(2). Important in this

case, was the exception in relation to "assembly, installation

or demolition of plant or machinery...on a site where the primary

purpose is...nuclear processing, power generation, or water

effluent treatments..."

If a broad approach was taken to the definition (as had been

favoured in the earlier case of ABB v Norwest Holt Engineering

Ltd (2000) 77 ConLR 20) then any works that related to the

assembly or installation of plant or machinery for a power plant

would fall under the exclusion in section 105(2) and this dispute

would therefore be outwith the scope of the Act.

If, however, a narrow approach was taken (as it was in

Palmers Ltd v AB Power Construction Ltd [1999] BLR 426),

unless the works directly related to the assembly or installation

of plant for instance, they may not be excluded. On this

view, since NMC's works were not the assembly or installation

of the power plant or machinery, they were not excluded and the Act

would apply.

In deciding which view was to be preferred, the court looked at

the records of the parliamentary debate when the Act was being

drafted. The court held that had Parliament wanted all works

directly or indirectly linked to one of the excluded categories to

be excluded, they would have inserted a catch-all provision into

the Act. The fact that they had not done so indicated that

they had not intended the Act to be excluded in circumstances such

as...

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