Palmers Ltd v ABB Power Construction Ltd 2

United Kingdom

A contract can be partly for construction operations and partly for works not falling within that definition. Adjudication can only be sought for that part of the contract that is for construction operations. It is possible for the main contractor not to be entitled to seek adjudication when his subcontractor can. A notice to withhold must specify the amount withheld.

HHJ Thornton QC, Technology & Construction Court

6 August 1999

P was a scaffolding sub-contractor appointed by A to provide scaffolding services at the site where A was assembling and erecting a HRSG boiler. P was a sub-sub-sub-contractor for part of a huge project involving plant to be used for power generation. A alleged that P had caused delay to its works, and purported to exercise its rights of set off by issuing notices to withhold payment against some monies. P issued a notice of adjudication claiming non payment of interim invoices.

Upon receiving this notice, A said that P's contract was not a "construction contract", and so any adjudicator would lack jurisdiction. P issued proceedings seeking declarations of the court that an adjudicator would have jurisdiction. The court noted that there was no provision in the Scheme (which would apply as the contract contained no reference to adjudication) allowing the adjudicator to examine or make a decision as to whether he had jurisdiction to act.

A maintained that its works were not "construction operations", and the boiler and its supporting structures and pipework were not works forming part of the land, industrial plant nor power supply. The parties agreed that A's contract with the main contractor was not a "construction contract" since it fell within the exclusion at Section 105(2). The court found that it was possible for some work on a site to fall within exclusions and for other work not to be excluded. Therefore some sub-contractors would be able to seek adjudication where the main contractor could not. In this case, P was carrying out "construction operations" and did have a "construction contract".

The court therefore decided that an adjudicator when appointed would have jurisdiction to deal with the matter. The court also found that A's notices to withhold payment were ineffective since they did not identify any amount to be withheld, and therefore P was entitled to payment of its invoices. P was given liberty to apply for summary judgment.

A contract can be partly for construction operations and partly for works not falling within that definition (in this case, works involved boiler, supporting structures and pipework). Adjudication can only be sought for that part of the contract that is for construction operations. It is possible for the main contractor not to be entitled to seek adjudication when his sub-contractor can. A notice to withhold must specify the amount withheld.