Meaning of “construction operations”
By Victoria Russell, Fenwick Elliott
Savoye and Savoye Ltd v Spicers Ltd  EWHC 33 (TCC) (15 January 2015)
Spicers engaged Savoye (a French company) and Savoye Ltd (a related British company), together “Savoye”, to design, supply, supervise and commission a new automated conveyor system at its existing factory in the West Midlands to fulfil orders for office products. The system comprised conveyors and other equipment for the packing of the products and the printing of labels. The conveyors were attached to the ground floor concrete slab by some 2,000 bolts but the other substantial and/or important pieces of equipment were not all mechanically attached to the floor.
Savoye completed the installation towards the end of 2013; however, disputes arose between the parties regarding payment to Savoye and the quality and performance of the installation. Ultimately Savoye gave notice of adjudication. Spicers objected to the jurisdiction of the adjudicator on the basis that the works were not “construction operations” within the meaning of section 105 HGCRA. The adjudicator’s non-binding opinion was that he had jurisdiction and he proceeded to find that Spicers should pay Savoye approximately £828,000 plus VAT, interest and his fees.
When Spicers failed to pay, Savoye commenced enforcement proceedings in September 2014. However, Mr Justice Akenhead refused the application for summary enforcement on the basis that there were triable factual issues and because he felt that a site visit was necessary. The expedited trial still took place promptly on 3 December 2014.
There were two issues that the Judge had to consider. First, was the conveyor system sufficiently attached to the floors so as to give rise to a proper conclusion that it was “forming, or to form, part of the land” for the purposes of section 105 HGCRA? Second was section 105(1) engaged in that the installation of the conveyor system represented “construction operations”?
Mr Justice Akenhead’s decision is, of course, very specific to the facts of the case and the construction and purpose of the conveyor system in question. Nevertheless, it provides useful guidance on the definition of “construction operations” and the meaning of “forming, or to form, part of the land” for the purposes of section 105 HGCRA and highlights that section 105(1)(b) includes the provision of industrial plant within the definition.
In addition, the Judge noted that section 105 mentions “forming, or to form, part of the land” as a part of the definition of “construction operations”. He formed the view that whilst the law relating to fixtures in the context of the law of real property casts useful light on whether the item of work forms part of the land, it is not a pre-condition for the purposes of section 105:
“Whether something forms part of the land is a question of fact and this involves fact and degree … [it] is informed by but not circumscribed by principles to be found in the law of real property and fixtures …”
Furthermore, in relation to the object or installation forming part of the land, one should have regard to the purpose of the object or installation in question.
Where machinery or equipment is installed on land or within buildings, particularly if it is all part of one system, regard should be had to the installation as a whole, rather than each individual element on its own. Simply because something is installed in a building does not necessarily mean that it is automatically a fixture or part of the land.
The evidence in the view of the Judge was clear that the conveyor system was attached to the concrete floor slab on the ground floor and the raised and rising conveyors to the steelwork forming part of the mezzanine; in addition, at the mezzanine level, it was attached by bolts to the floor. The real question was whether the conveyor system taken as a whole was sufficiently attached to the floors and underside of the mezzanine floor as to give rise to a proper conclusion that it was forming or intended to form part of the land. Mr Justice Akenhead held that the conveyor system did form part of the land for the purposes of section 105:
“a) There were extensive and substantial fixings (by bolts) of the system to the body of the building… There were large numbers (in the thousands) of bolts drilled into the floors…;
b) The conveyor system is very substantial and large. It covers a large section of the ground floor and a significant part of the mezzanine floor…;
c) The conveyor system was clearly intended, both subjectively and objectively, to be relatively permanent and to perform a key role in the warehouse…;
e) The fact that some of the elements comprising the system … were not as such mechanically attached to the floor does not undermine the conclusion…
f) The fact that parts of the system are relatively easily removable does not itself weigh particularly heavily against the conclusion which I have reached…”
The Judge found that it followed from the above that section 105(1) HGCRA was engaged and that the installation of the conveyor system did represent “construction operations”. Mr Justice Akenhead accordingly held that the adjudicator had jurisdiction to decide the dispute and enforced the decision.