Homer Burgess Limited -v- Chirex (Annan) Limited

The adjudicator erred in law in his construction of 'plant' in section 105(2) of the Construction Act 1996 insofar as the pipework's installation was not an 'construction operation' and therefore fell within the exception in section 105(2)(c)(ii)
The employer's business was that of manufacturing pharmaceuticals. It was common ground that the primary activity at the site was the production, processing and bulk storage of pharmaceuticals. A contract was entered into for the contractor to construct pipework which formed the links between various items of plant and machinery and through which ingredients and pharmaceuticals in the process of manufacture were conveyed between those items. Payment disputes arose which the contractor referred to adjudication. The contractor contended that the works were ?construction operations? within the meaning of section 105(1) of the Construction Act 1996 with the result that the contract was a ?construction contract.? The employer contended that the works fell within the exceptions to what constitute ?construction operations? under section 105(2)(c)(ii). In other words the primary site activity was (admittedly) the processing of pharmaceuticals and the works (or at least a very high proportion of them) comprised the assembly or installation of plant or the erection of steelwork to support such plant. The adjudicator decided that the works were not the assembly or installation of plant with the result that the Act applied. Lord Macfadyen rejected the adjudicator's construction of the word ?plant?. This was on the basis that that the pipework in question was clearly part of the plant being assembled or installed on site and that its installation therefore constituted an operation falling within the scope of the exception in section 105(2)(c)(ii) (and was accordingly not, contrary to the adjudicator's construction, a ?construction operation?). The pipework was in a real sense part of the apparatus to be used by the employer to carry on the business of manufacturing pharmaceuticals insofar as without it, the individual items of machinery and equipment would have been unable to operate. In the absence of a statutory definition of ?plant? under the Act, the language of section 105 should, if possible, be given its ordinary meaning. Advice Note When deciding whether the work under a contract is a ?construction operation? or whether it falls within an exception in the Construction Act of what is deemed to be such an operation, the court will generally try to apply what it considers to be the ?ordinary meaning? of the work in question.