Defendant subcontracting to claimant to install equipment in modules – Modules to be used as living quarters at oil or gas rigs – Claimant seeking declaration that contracts were construction contracts – Whether modules forming part of land – Housing Grants Construction and Regeneration Act 1996 – Claim dismissed
Odebrecht Oil (the defendant) subcontracted to Staveley Industries (the claimant) for the design, engineering, supply, delivery, installation, testing and commissioning of instrumentation, fire and gas, electrical and telecommunications equipment. The equipment was for installation in steel structures called modules, which were intended to be used as living quarters for operatives at an oil or gas rig. The modules were to be welded onto platforms supported by legs founded in the seabed.
The claimant applied under the Civil Procedure Rules Part 8 for a declaration that the contracts between it and the defendant were construction contracts, as defined by the Housing Grants Construction and Regeneration Act 1996, and were accordingly subject to the provisions of that Act regarding adjudication of disputes. Section 104(1) of the Act provided that “construction contract” meant an agreement for the carrying out of construction operations. “Construction operations” were defined in section 105(1) as “(a) construction… of buildings or structures forming, or to form, part of the land (whether permanent or not)” and “(c) installation in any building or structure of fittings forming part of the land, including, … systems of heating, lighting…”. The claimant contended that the subcontracted work fell within both section 105(1)(a) and (c).
It was common ground that the installation work was of a kind described in para (c). The issue was whether the modules were to form part of the land. The claimant contended that the rigs were founded in the seabed, and that the Interpretation Act 1978 defined land as including land covered by water. The defendant contended, inter alia, that: (i) “the land” was not any land, but was the land upon which the relevant construction operation was carried out; and (ii) the rigs were not “land”.
Held: The claim was dismissed.
1. It was clear that the construction of, or the installation of fittings in, buildings or structures forming part of land could only take place on the land where the building or structure was situated when built. The use of the definite article in section 105(1) suggested that “the land” referred to that land. Further, by virtue of section 104(6)(b) of the Act, the operations did not fall within the Act unless they were carried out in England, Scotland or Wales.
2. The provisions of section 105(1) were derived from section 567(2) of the Income and Corporation Taxes Act 1988. The corresponding provision in that Act provided for “structures… including offshore installations”. The absence of any such provision in section 105(1) suggested that there was no intention to include offshore installations within the ambit of the 1996 Act. The structures that were, or were to be, founded in the seabed below low water mark were not structures forming, or to form, part of the land for the purposes of section 105(1). Accordingly, the 1996 Act did not apply to the subcontracts in question.
Marc Rowlands (instructed by Hammond Suddards Edge, of Birmingham) appeared for the claimant; Stephen Furst (instructed by Masons) appeared for the defendant.
Sarah Addenbrooke, barrister
