Engie Fabricom UK Ltd v MW High Tech Projects UK Ltd

Citation: [2019] EWHC 1876 (TCC)

Section 105(2): when is the primary purpose of the site power generation?

In Engie Fabricom UK Ltd v MW High Tech Projects UK Ltd the Court refused to enforce an adjudicator’s decision as the Defendant had real prospects of success in establishing that the primary activity at site was power generation, thus engaging section 105(2)(c) of the Housing Grants, Construction and Regeneration Act 1996, such that the adjudicator had no jurisdiction.

The works concerned a fluidised bed gasification power plant in Hull.  The key issue on jurisdiction was whether:

1) As the Claimant had argued (successfully before the adjudicator): the primary activity on site was the disposal and thermal treatment of waste, by incineration/gasification.  Power generation was, the Claimant suggested, merely a secondary activity.

or

2) As the Defendant had contended (unsuccessfully before the adjudicator): the primary activity on site was power generation.

The legal principles to be considered in determining the primary purpose on site include:

  1. The nature and purpose of the whole site.
  2. Why the site is located where it is.
  3. Whether the site contains an independent power station, or one which depends on the relationship with the activity undertaken on site.
  4. Whether electricity is generated simply for the purpose of powering the activities of the site itself, or for export to the National Grid.
  5. The nature of the power generation activity itself: gasification, as opposed to incineration.

The Claimant had placed reliance on EU legislation and the Environment Agency’s classification of the facility.  The Court doubted the relevance of European legislation concerned with the protection of the environment and public health, when considering whether a particular site is within or without an exception in domestic legislation (the 1996 Act) concerned with cash flow in the UK construction industry.

The Court rejected the application for summary judgment to enforce.  The matter will now proceed to a Part 7 trial on the issue of the primary activity on site.  That may have implications for the wider disputes on the project, which are of significant value.

Simon Hargreaves QC and Tom Owen appeared for the Defendant, instructed by Clyde & Co.

Counsel

Simon Hargreaves QC
Tom Owen

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