EMPLOYER’s RIGHTS OVER PLANT: COSSLETT IN THE HOUSE OF LORDS

Smith (as Administrator of Cosslett (Contractors) Ltd) v Bridgend County Borough Council [2001] UKHL 58; [2002] BLR 160)

Felicity Maher, Magdalen College, Oxford

Clause 63(1) of the ICE Conditions (5th edition, 1973) in so far as it grants to the employer a power to sell the contractor’s plant, creates a floating charge which is registrable under s. 395 of the Companies Act 1985. If the charge is not registered it is void not only against the liquidator or administrator of the contractor but also against the contractor itself. Accordingly, the purported exercise of the power of sale by the employer is a conversion of the contractor’s property for which the employer will be liable in damages. The employer may not set off against its liability to the contractor in damages for conversion the contractor’s liability to the employer under the contract. However, clause 63(1), in so far as it grants to the employer a power to retain and use the contractor’s plant, does not create a floating charge but a purely contractual right which does not require registration under s. 395.