Contract between claimant and defendant for installation of electricity generators at printing sites – No express agreement for adjudication – Dispute between parties – Defendant applying for appointment of adjudicator – Claimant objecting – Whether construction contract between parties – Whether primary activity of site power generation – Section 105(2) of Housing Grants Construction and Regeneration Act 1996 – Claim dismissed
Mirror Colour Print Group decided to build diesel-powered electricity generation stations on two of its printing sites, and contracted with Scottish Southern Energy (SSE) for their construction. SSE entered into a subcontract with the claimant (ABB) for the design, build and maintenance of the sites, and ABB then entered into a sub-subcontract with the defendant (Zedal) for the supply, installation, labelling, termination and testing of all field wiring, including the supply and installation of certain metal containment systems and secondary steel support. There was no express agreement for adjudication in the contract between ABB and Zedal.
Disputes arose between the parties, and Zedal applied for the appointment of an adjudicator under the Housing Grants Construction and Regeneration Act 1996. ABB challenged the jurisdiction of the adjudicator, contending that operations of the type carried out by Zedal fell within the exception contained in section 105(2)(i) of the 1996 Act, which provided that operations of “assembly, installation or demolition of plant or machinery… on a site where the primary activity is… power generation” were not “construction operations” for the purposes of the Act.
Relying upon the exception, ABB applied for an order that its contracts with Zedal were not construction contracts. It submitted that: (i) the exception applied not merely to large power station projects, but also to much smaller power-generation projects such as the one in question; and (ii) the “site” of the operation, within the meaning of section 105(2)(c)(i), was the small area upon which the generators stood, surrounded by a security fence.
Held: The claim was dismissed.
If any generator surrounded by a security fence were regarded as a “site”, then every such generator would be an exception to the Act, because, regarded on its own, it would inevitably have a “primary activity” of power generation. The reference to “a site” had, accordingly, to be broader than this, as any construction of the Act that excluded the possibility of power generation being a secondary or tertiary activity was contrary to parliament’s intention. To make any sense of the Act, one had to look at the nature of the whole site and ask what its primary purpose was. In the instant case, the primary purpose of the sites was printing, rather than power generation. The works in question did not, therefore, fall within the exception.
Mark Raeside (instructed by DLA, of Birmingham) appeared for the claimant; Simon Lofthouse (instructed by Eversheds, of Derby) appeared for the defendant.
Sarah Addenbrooke, barrister
