Cleveland Bridge (UK) Ltd v Whessoe-Volker Stevin Joint Venture

Under the Housing Grants, Construction and Regeneration Act 1996, exclusions from construction operations are construed narrowly and applied to the specified operations. In section 105(2)(c)(ii), “erection” of steelwork ordinarily covers lifting and connecting steelwork on site. It does not include fabrication drawings, off-site fabrication or delivery to site.

Where an agreement contains both construction operations and excluded operations, adjudication applies only to the former. An adjudicator may decide the referable part of a dispute, but a single decision covering both referable and non-referable parts is invalid and unenforceable. The court cannot reconstruct or sever that decision in enforcement proceedings.

Cleveland Bridge sought summary judgment to enforce an adjudicator’s decision requiring the Joint Venture to pay £317,500 plus VAT under an agreed final account for works at an LNG terminal.

The subcontract covered fabrication, delivery and erection of structural steelwork, construction and cladding of buildings, and painting. The Joint Venture argued that the subcontract was not, or was only partly, a construction contract because steelwork supporting or providing access to plant or machinery was excluded by section 105(2)(c)(ii) of the Housing Grants, Construction and Regeneration Act 1996.

The issues were the scope of the exclusion, the adjudicator’s jurisdiction over a mixed contract and dispute, and whether the adjudicator’s single decision could be severed for enforcement.

1. Classification of the works. The subcontract comprised both construction operations under section 105(1) and excluded operations under section 105(2)(c)(ii). The steelwork for the piperacks and pipebridges was significant and substantial steelwork supporting or providing access to plant or machinery at a site whose primary activity was the production, transmission, processing or bulk storage of gas.
2. Meaning of “erection”. The exclusions in section 105(2) required a narrow construction. “Erection” of steelwork meant essentially lifting the steelwork into position and connecting it together. It did not include fabrication drawings, connection design, off-site fabrication, painting or delivery to site. Those activities remained construction operations under section 105(1).
3. Mixed agreements and jurisdiction. Section 104(5) contemplated agreements relating to construction operations and other matters. The Act’s adjudication provisions applied only so far as the agreement related to construction operations. The adjudicator therefore had jurisdiction over the referable part of the dispute, although the whole dispute could not be referred to adjudication.
4. Severability. The referral concerned one dispute about payment of the final account, not separate disputes. The adjudicator decided the whole dispute and did not issue an alternative decision limited to the construction operations. Her decision therefore included matters outside her jurisdiction and was not valid or enforceable.
5. The implied term in paragraph 23(2) of Part I of the Scheme required compliance with a valid adjudicator’s decision. It did not make individual findings leading to a single decision separately binding. The court could not divide the sum, revise the decision or create a partly court-made decision. Cleveland Bridge’s Part 24 application was dismissed.