Conor Engineering Ltd v Les Constructions Industrielles De La Mediterranee (CNIM) SA

For the purposes of section 105(2)(c) of the Housing Grants, Construction and Regeneration Act 1996, the relevant site is assessed as a whole. Whether its primary activity is power generation is a question of fact. The court may consider the site’s principal purpose, the nature and scale of its activities, and its output. In a new facility, “is” may mean “is, or will be”. An energy-from-waste plant is not necessarily primarily a power-generation site merely because it produces electricity.

Where an adjudicator directs payment within a specified period and has power to determine when payment is due and the final date for payment, that direction determines the relevant final date for the purposes of section 111. A withholding notice must then be served within the statutory period. Later invoices do not extend time where the surrounding conduct is inconsistent with waiver or agreement.

Conor Engineering Limited sought enforcement under Part 8 of the Civil Procedure Rules of two adjudication decisions requiring CNIM to pay sums under boiler and pipework subcontracts. CNIM resisted enforcement, relying on alleged rights to set off liquidated damages.

The central issues were whether the contracts fell within the statutory construction regime, given that the works were carried out at an energy-from-waste facility, and whether CNIM’s withholding notices were served in time. The court also considered whether the adjudicator’s payment directions fixed the final dates for payment and whether later invoices extended or waived the relevant period.

1. Statutory scope. The relevant site for section 105(2)(c) of the Housing Grants, Construction and Regeneration Act 1996 was the whole Chineham site, not merely the area where CEL worked. The question whether power generation was the site’s primary activity was one of fact.
2. The word “is” in section 105(2)(c) could mean “is, or will be”, so that the statutory exclusion was not limited to an already operating facility. The court accepted the reasoning in ABB Power Construction Ltd v Norwest Holst Engineering that the contrary construction would produce an absurd result. Applying the statutory test, the plant’s principal purpose and principal physical activity were the incineration of waste. Electricity generation was a by-product or spin-off. The contracts therefore fell within the Act.
3. Final date for payment. Clause 23.2 supplied a mechanism for calculating the final date for payment. In any event, clause 31.13 empowered the adjudicator to decide when payment was due and the final date for payment. Although he made no express finding on the point, his direction that payment be made within 14 days of the decisions had to be treated as determining the final date.
4. Under section 111, a withholding notice had to be served at least seven days before that final date. The decisions were made on 16 January 2004 and stated that payment was due within 14 days of that date. The notices served on 26 January were therefore late. The argument that time ran from receipt of the decisions was rejected.
5. The later invoices did not extend the payment period or waive CEL’s right to insist on the statutory timetable. The commencement and threatened commencement of enforcement proceedings were inconsistent with any such agreement, representation or belief. CEL was entitled to enforce the decisions. The appropriate order was to be agreed, with outstanding issues capable of determination after judgment.