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

The exclusions in section 105(2)(c) of the Housing Grants Construction and Regeneration Act 1996 should generally receive a narrow construction. They exclude only operations properly characterised as the assembly, installation or demolition of plant or machinery, and specified steelwork directly connected with supporting or providing access to it. They do not exclude all construction work on a power-generation site or all work necessary for a project. The relevant work must be assessed broadly as a whole, but whether it falls within the exclusion remains a matter of fact and degree. Part 8 declarations should be refused where the issue is insufficiently precise or is likely to require substantial factual or expert evidence.

The claimant carried out enabling and civil works for flue gas desulphurisation plants at two power stations under four contracts. It sought declarations that the works were construction operations under section 105 of the Housing Grants Construction and Regeneration Act 1996, rather than excluded operations under section 105(2)(c)(i), and that the defendant bore responsibility for foundation earth-bonding design and had instructed a change to that work.

The defendant disputed the statutory classification and contended that the earth-bonding issues were unsuitable for determination under CPR Part 8 because they involved factual and expert disputes.

1. Statutory classification. Section 105(1) establishes a wide definition of construction operations, while section 105(2) creates specific exclusions. Section 104(5) recognises that a contract may relate partly to construction operations and partly to excluded matters. The specific wording of section 105(2)(c) favours a narrow construction. If Parliament had intended to exclude all construction work on a power-generation site, or all preparatory work, it could have said so.
2. The Parliamentary material admissible under Pepper v Hart [1993] AC 593 confirmed that the exclusion was intended to cover plant, machinery and steelwork forming an integral part of, or directly and necessarily connected with, them. Ordinary building, civil engineering and site work remained within the Act. The broader approach in ABB Power Construction Ltd v Norwest Holst Engineering Ltd (2000) 77 Con LR 20 was therefore not preferred. The narrower approach in Palmers Ltd v ABB Power Construction Ltd [1999] BLR 426 was preferred, and the reasoning in Comsite Project Ltd v AAG [2003] EWHC 958 (TCC) was adopted.
3. The work must nevertheless be considered broadly, rather than by minute analysis of individual items. Whether work is assembly or installation of plant or machinery is a matter of fact and degree. The enabling works, including temporary roads, temporary facilities and demolition, were preparatory construction operations and did not fall within section 105(2)(c)(i). The civil works, including foundations, concrete buildings and structures, were likewise construction operations and were not excluded.
4. Part 8 issues. The earth-bonding declarations were unsuitable for Part 8. The evidence did not identify with sufficient precision which aspect of design responsibility was disputed. The alleged change was also unclear: it might concern the change from buried to embedded earthing, attachment to reinforcement, the type or size of conductor, the method of connection, or a new specification. The court therefore declined to make either declaration.
5. Subject to submissions on the precise form, declarations were appropriate that the enabling and civil works were construction operations to which the Act applied. No declaration was made on design responsibility or the alleged change.

First-instance decision. No prior appellate decision is stated in the judgment.