Sermet NI Ltd v Construction Industry Training Board  (Appeal)  (1 January 2004)

INDUSTRIAL TRIBUNALS

CASE REF: 186/03

APPLICANT:		Sermet NI Ltd

RESPONDENT:		Construction Industry Training Board

DECISION

The unanimous decision of the tribunal is that the applicant’s appeal be dismissed.

Appearances:

The applicant was represented by Mr R Donaghy Barrister-at-Law instructed by Conn and Fenton Solicitors.

The respondent was represented by Mr J Coyle Barrister-at-Law instructed by Babington & Croasdaile Solicitors.

SUMMARY REASONS

1.	Mr David Ingram, a director of the applicant company, stated that the company had been formed in 1976.  It had five employees; two directors including himself both of whom were involved in sales with an element of site work, including assembly work and commissioning work, together with an engineer and two female employees who carried out tasks of an administrative nature.  In response to the tribunal he indicated that the company’s core business was the provision of boilers, the heat source for heating systems.  More than half of these boilers would have to be constructed on site.  That work, if it was necessary, would be carried out by the company.  The company would then be involved with the commissioning of the entire system when the various other trades involved had completed their part of the work  The commissioning, Mr Ingram said in his direct evidence, is, in effect, the testing of the system.  He described to the tribunal an extensive range of checks and tests including safety tests which required to be carried out before the boiler could be used.  Adjustments could have to be carried out also and final checks on the overheat thermostat and the burner lockout to ensure that if the flame fails the fuel shuts off.  With that process satisfactorily completed the company’s involvement was finished save for any failure of the boiler during its warranty period or, on rare occasions, where the company was engaged to service the equipment.

Mr Ingram stated that the engineer was largely involved in boiler assembly, burner commissioning, or the commissioning of other equipment.  He himself was involved to a minor degree only in commissioning work and the other director to an even smaller extent in commissioning work.  The main thrust of the directors activities related to sales.  The company did, with some orders, arrange for transport and delivery but not in others.  The two female employees were administrative.

2.	The issue for the tribunal was whether the company’s activities were such as to render the company liable to pay the levy imposed by the Construction Industry Training Board.  That board was set up under a statutory scheme to provide training in the construction industry.  The ‘scope’ definition is contained in Schedule 1 of the Industrial Training Act (NI) 1964.  The provision for payment of the actual levy is dealt with on an annual basis by a Levy Order.  The relevant Order provides for a levy to be imposed on an employer in respect of a construction establishment at a particular percentage of the relevant earnings paid to the employers employees.  The levy order defines a construction establishment as ‘an establishment in Northern Ireland engaged wholly or mainly in the construction industry…..’.  It goes on to define ‘construction industry’ as any one or more of the activities mentioned in the Schedule to the Construction Board Order, which ultimately relates back to the Schedule to the Industrial Training Act (NI) 1964 as previously mentioned.

3.	Paragraph 1 of the Schedule is drawn in very wide terms.  The relevant portions include “all operations in 

(i)	The construction ……. of a building.

(vi)	The provision or continued provision for any building or other construction … of water, gas, lighting, heating or ventilation, being operations undertaken in, upon, above, or under the building or the close, curtilage or precincts thereof, or such construction or work, or any site above mentioned”.

They are also stated to include “operations in connection with sale, packing, warehousing, distribution or transport” when those activities are carried out in association with or in conjunction with any of the construction activities which have been named above.

4.	On behalf of the applicant it was submitted that there was no definition of “construction” or “provision”.  The dictionary definition of construction is the action or process of constructing and constructing itself is defined as building and erecting.  Provision is defined as the action of providing or supplying.  It was the applicant’s submission that the delivery and testing of the boiler would not fall within either of these definitions.  The tribunal does not agree.  In the tribunal’s view the activities are qualified by the preceding phrase “all operations in”.  It is not necessary that the company is constructing the building or providing the heating – it is a question of whether it is engaged in an operation in the construction or the provision.  If the company’s involvement was merely to deliver a free standing unit to the site without any further involvement then there would be some force in the applicant’s argument.  However, in this case, it was accepted that once installed the boiler becomes an integral part of the building.  Mr Ingram indicated that as regards the company’s core activity more than half the boilers supplied had actually to be constructed in situ.  These factors suggest that, in those cases at least, the applicant is involved in the construction of a part of the building.  Furthermore, it is clear from the evidence that the process of commissioning is an essential part of the overall process of installing the system without which the system could not possibly, or safely, be used.  The company is also engaged from time to time in the repair of boilers under warranty or as part of servicing arrangements, an activity which also falls within the scope definition, albeit not previously quoted.

In the tribunal’s view, therefore, the engineers activities amount to operations in the construction of the building or in the provision of heating.  Any suggestion that they cannot fall within the definition if they relate only to part of the overall structure or system seems to the tribunal to be untenable.  The boiler was conceded to be part of the building when finally installed and, in any event, is an essential part of the heating system without which there would be no heating system.  

Although the directors were not much involved in any activity which would fall within the definitions just discussed, they are engaged in sales, an activity which is brought within the scope definition when it is carried on in association with or in conjunction with the previous activities.  As the company is already engaged in construction or provision activities the sales element is included in the definition as well.  The overall position of the company therefore is that its three active employees are all engaged in activities which fall within the scope definition.  The other two employees are administrative and support the activities of the other three.  Consequently, the company can be said to be wholly or mainly engaged in the construction industry on the basis of the definition contained in the relevant schedule.

5.	In reaching this conclusion the tribunal draws some comfort from the object which the legislature must have had in view in framing the legislation in the first place.  The purpose must have been to ensure that persons engaged in the construction industry receive adequate training to ensure their own safety and the safety of those who use the buildings which they construct.  The scheme aims to provide a method whereby adequate finance for such training can be obtained from the industry as a whole for the benefit of the industry itself and the public at large.  In this case the company’s engineers activities clearly involve safety and that engineer will, from time to time, require training.  Indeed, Mr Ingram’s evidence was that he had received training from the respondent in the past.  It was submitted on the part of the applicant that the respondent are not now providing courses which would be of benefit to the applicant and that they should not therefore have to pay the levy.  This does not, in the tribunal’s view, necessarily follow.  The nature of the training provided must to some degree be within the discretion of the respondent though it would clearly be preferable that training suitable for any class of business from which levy was being sought would be generally available.  It was also submitted on behalf of the applicant that, an employee of the board at an inspection of the applicants procedures, suggested that the applicant company was not within scope and that this view could not be ignored.  While the views of an experienced official should certainly be given respect they cannot be allowed to determine the course of events.  To hold otherwise would be to deny the tribunal its jurisdiction and, more important, in many cases to deny applicants any right of appeal.

Chairman:
Date and place of hearing: 17 October 2003 and 7 January 2004, Belfast.
Date decision recorded in register and issued to parties: