Concrete answers to construction contract exclusions

Concrete answers to construction contract exclusions

Concrete Answers to Construction Contract Exclusions

What’s nice about concrete is that it looks unfinished.” – Zaha Hadid

While there was a small flurry of cases when the Construction Act came into force, it is pretty rare these days that there is confusion surrounding what is (or is not) considered a ‘construction operation’.

Section 105 of the Act sets out a fairly detailed list of activities which are construction operations and identifies specific exclusions. Given many of the excluded works set out in section 105(2) of the Act concern themselves with specialist industries such as the extraction of fossil fuels or nuclear processing – it is often clear to all involved whether a contract concerns itself with construction work or not. One might even argue that, like concrete, the definition and its exclusions are robust and durable, rarely being a point of dispute.

As a result, it is always surprising to see a case in the Technology and Construction Court which looks at section 105 in further detail. Yet this was the case in Universal Sealants (UK) Ltd (t/a USL Bridgecare) v Sanders Plant and Waste Management Ltd which was handed-down in August.

Background

Universal Sealants had been appointed to carry out the replacement of expansion joints to a viaduct in Gateshead. Sanders, a sub-contractor, had been employed to supply concrete to the site which Universal claimed was defective and would require replacing. The dispute over the breach of contract and potential damages was quickly referred to adjudication.  The terms of the contract were also in issue as Universal had issued a sub-contract order, yet upon delivery the foreman signed a delivery note which included Sanders standard terms and conditions.  A classic battle of the forms.

While the adjudicator found in favour of Universal, Sanders reserved its position on jurisdiction.  They argued that not only had adjudication been commenced under the wrong contract but that, in the absence of express adjudication clauses, the Construction Act 1996 did not apply to either.

Sanders’ reasoning for their position was that the delivery of concrete was excluded under section 105(2)(d) of the Construction Act 1996 which states that the “delivery to site of materials” was not considered a construction operation “except under a contract which also provides for their installation.” Sanders stated that they had not installed the concrete, but had merely delivered it. Universal argued however that by pouring the concrete into a series of channels this constituted installation.

It was therefore up to the court to determine whether the adjudicator had jurisdiction to decide the dispute based on whether ‘construction operations’ had been deemed to take place.

Decision


The court ultimately held that Sanders had only delivered the concrete to site, on the grounds that:

  • neither contract made express reference to ‘installing’ the concrete at the site. The court stated that while it was unnecessary for the parties to make specific use of the word ‘installation’, its absence from the sub-contract order was notable; and
  • the pouring of concrete into a set area did not amount to ‘installation’. Not only was there evidence to suggest that Universal had instructed Sanders on where to pour the mix but that the contractor’s employees were also present to position the concrete.. They therefore concluded that pouring amounted to the same as delivery for the purposes of the contract.

As a result, the supply of concrete was found to be excluded under section 105(2)(d) of the Construction Act 1996. This meant that there was no statutory right to adjudicate and the adjudicator’s decision was ultimately unenforceable.

Conclusion

The decision continues to emphasise the approach the Technology and Construction Court will take with respect to interpreting whether ‘construction operations’ are being undertaken by one of the parties.

Where there is uncertainty as to whether the works could be considered ‘construction operations’, it is important that the parties consider whether an express adjudication clause should be incorporated. Only by doing this, can the parties truly have concrete certainty going forward as to how disputes can be resolved. 

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