ABB engaged Palmers to carry out scaffolding work in connection with a contract at Esso Fawley Co-Generation Project near Southampton. ABB were erecting part of the Co-Generation Plant. Palmers were effectively sub-sub-sub-contractors for a huge complex industrial power generation project.

In early July 1999 ABB contended that Palmers had breached its contract by failing to supply an adequate number of appropriately qualified personnel. ABB set-off claims against amounts owed to Palmers. Palmers brought a series of claims that were then referred to adjudication. ABB responded stating that the contract with Palmers was not a “construction operation” nor a “construction contract” pursuant to the HGCRA. Palmers immediately commenced legal proceedings in order to determine that point.

HHJ Thornton QC referred to section 104(1) where “a “construction contract” means an agreement with a person for… “(a) the carrying out of construction operations.” Section 105(1) stated that construction operations meant, amongst other things,:-

“(e) operations which form an integral part of, or are preparatory to, or are for rendering complete, such operations as are previously described in this sub-section, including site clearance, earth moving, excavation, tunnelling and boring, laying of foundations, erection, maintenance or dismantling of, scaffolding, site restoration, landscaping and the provision of roadways and other access works;”

Section 105(2) excluded certain operations where the “primary activity” included power generation.

The Judge held that the fixing into position of the steel structure and the boiler would clearly become part of the land once fixed. Since this was the normal way of fixing such equipment ABB’s work was a construction operation. The question then, was whether Palmers’ scaffolding works fell outside of section 105(1) of the Act. Both parties accepted that exclusion of section 105(2) applied.

There was, however, a contention between 105(1)(e) and section 105(2)(c)(i). In essence was the scaffolding for construction operation forming part of the land, or was it excluded as scaffolding to a power generation plant?

The Judge held that the word “described” in section 105(1)(e) rather than “defined” meant that the words related to sub-section 1 even if they were outside of the operation of the Act by virtue of section 105(2). As a result an operation that was preparatory to an excluded process could be subject to the HGCRA if that operation was a construction operation. It was, therefore, possible for an employer/contractors’ contract to fall outside of the meaning of construction operations but for a sub-contract providing for building, foundation or paving services to come within the definition. As a result some sub-contractors will be able to seek adjudication pursuant to the HGCRA while a contractor may not be able to pursue an adjudication against the employer.

Palmers could therefore refer the dispute to adjudication. His Honour also noted that an Adjudicator had no power to decide his own jurisdiction. He stated:

“Here, the principal dispute is one of jurisdiction, being one as to whether there is in being such as contract at all. It is clearly appropriate for the courts to intervene since only when it has declared that the relevant contract is a construction contract will an effective adjudication be possible. This is particularly so given that there is no statutory power given to an adjudicator, if appointed, to resolve disputes about his jurisdiction.”