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Equitix ESI CHP (Wrexham) Limited v Bester Generacion UK Limited [2018]

February 2018 - Issue 102

The recent case of Equitix ESI CHP (Wrexham) Limited v Bester Generacion UK Limited [2018] has discussed what activities amount to excluded activities from adjudication under The Housing Grants (Construction and Regeneration) Act 1996 as amended (Construction Act).

The Facts

Equitix ESI CHP (Wrexham) Limited was a special purpose vehicle created for a project to design and build a Biomass Energy Generating Plant in Wrexham. Bester Generacion UK Limited was a contractor. The project experienced delay and Equitix issued a notice of adjudication seeking a declaration that Bester was not entitled to an extension of time. The adjudicator agreed that an extension of time should not be granted. Equitix subsequently terminated the contract and provided an Interim Account, requesting payment of a sum in excess of £11.5 million.

Bester contested the validity of Equitix’s termination and Equitix referred the dispute to the same adjudicator who previously dealt with matters and ordered payment to Equitix in the sum of approximately £9.8m.

The Construction Act defines a construction contract but excludes particular activities from the terms of the act. Bester contested the validity of the termination and referral to adjudication on the grounds that payment under the contract involved excluded activities.

S105(2) of the Construction Act excludes “assembly, installation or demolition of plant or machinery, or erection or demolition of steelwork for the purposes of supporting or providing access to plant or machinery, on a site where the primary activity is … power generation”.

Bester argued that the contract involved a power generation activity which was an excluded activity and therefore not permitted to be referred to adjudication. Equitix however, argued that at the time of termination of the contract, the site had not been excavated, and therefore no payments had been made for excluded activities.

In providing its judgment, Mr Justice Coulson commented that the Construction Act has been produced specifically to deal with construction projects that involve both included and excluded activities. As a result, the defendant was concentrating on the contract as a whole, and not the matters that were the subject of the dispute referred to for adjudication. The court therefore determined that the jurisdiction of an adjudicator depends on the subject matter of the dispute. The subject matter in this instance was the validity of the termination of the contract and the termination payment requested from Bester. Consequently, as at the time of Equitix terminating the contract, no excluded works had been carried out and the adjudicator therefore had jurisdiction.

The case highlights that it is the subject of the dispute which determines the jurisdiction of an adjudicator, rather than just the broad purpose of the contract subject matter of the works.

Siân Llewelyn

Trainee Solicitor

e sllewelyn@prettys.co.uk

t 01473 298231

 

 

 

 

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