Staveley Industries Plc (t/a EI.WHS) -v- Odebrecht Oil & Gas Services Ltd
The supply of equipment for modules for an oil rig supported by legs attached to the seabed below the low watermark were not "construction operations" within the meaning of section 105(1) of Construction Act 1996
28 February, 2001
The subject matter of the sub-contract was the design, engineering, procurement, supply, delivery to site, installation and testing and commissioning of instrumentation, fire and gas, electrical and telecommunications equipment in the UK for installation in modules to be used as living quarters on an oil rig in the Gulf of Mexico. The rig was supported by legs attached to the seabed below the low watermark. The issue for determination was whether the sub-contract were "construction contracts" within the meaning of the Construction Act 1996. Section 105(1) provides that "construction operations" mean, amongst other things, (a) the construction etc of structures forming or to form part of the land and (c) the installation in any building or structure of fittings forming part of the land, including lighting, power supply, fire protection or communications systems. Judge Havery held that the sub-contract works did not constitute "construction operations" within the meaning of section 105(1). This was on the basis that structures such as the modules were not structures forming or to form part of the land. The submission that the modules formed part of the land when standing in the yard in which they were constructed in the UK should be rejected insofar as they were movable, were intended to be moved and were not intended to be used at that location. The submission that fittings had to form part of the land to fall within section 105(1)(c) and that it was not sufficient that they could subsequently form part of the land should be rejected on the basis that the language of paragraph (c) required fittings to form part of the land at least prospectively if not immediately upon their installation. The submission that the modules were to form part of the land by reason of the rig being founded in the seabed and of the Interpretation Act 1978 defining land as including land covered by water should also be rejected. Advice Note In deciding whether work constitutes a ?construction operation? by reason of it being structures forming part of the land, the courts will look to where the work will be installed (and not to how the work is being carried out).