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International Construction Law Review

A PRINCIPAL’S RIGHTS IN RELATION TO CONTRACTOR’S PLANT UNDER NZS3910:2003: A PLEA FOR CONCEPTUAL CLARITY

ROBERT LONERGAN*

Senior Associate, Bell Gully, Auckland, New Zealand

Where a contractor is in default the rights of the principal to retain and use contractor’s plant are a key security concern of the principal and its financiers, and such rights are a self-help remedy universally provided for in standard form construction contracts. The Cosslett (Contractors ) case in both the Court of Appeal1 and in House of Lords2 affirmed the validity of that right but also highlighted limitations on the scope of that right under the general law applicable to security and priority.
In Cosslett the principal under a construction contract, Bridgend County Borough Council, had following a contractor default taken possession of certain items of plant owned by Cosslett (Contractors) Ltd, had used that plant for the purpose of completing the works and had purported to sell that plant upon completion and apply the proceeds in discharge of the contractor’s debt to it. The principal relied in doing so on clauses 53(2) and 63(1) of the Institute of Civil Engineers (ICE) Conditions of Contract and Forms of Tender, Agreement and Bond for use in connection with Works of Civil Engineering Construction (5th Ed 1973). Clause 53(2) provided that the contractor’s plant, goods and materials shall, when on site, be “deemed to be the property” of the principal. Clause 63(1) provided that, following the expulsion of the contractor from the site for default the principal may complete the works and “may use for such completion so much of the Constructional Plant Temporary Works goods and materials which have been deemed to become the property of the [Principal]”, and may thereafter “sell any of the said Constructional Plant Temporary Works goods and materials and apply the proceeds of doing so in or towards the satisfaction of any sums due or which may become due … from the Contractor …”. The issues for determination in both the Court of Appeal and in the House of Lords included whether the principal’s rights of possession, use, and sale were in the nature of floating charges which were void for non-registration as


[2005
The International Construction Law Review

152

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