Introduction

Construction plant (often alternatively referred to as “Equipment” or “Contractor’s Equipment”)^[1]Cf. NEC4, cl.11.2(9); FIDIC Red Book Conditions (2017), cl.1.1.16. is a major resource in any significant construction project. Questions over ownership, deployment and rights to retain and use that plant can be complicated and are a fertile source of disputes.

A common area of difficulty is where an owner of such plant, or someone entitled to possession of it, is wrongly deprived of its use. Resolution of those disputes will typically involve considerations of contract and less commonly of tort. A restitutionary measure of damages, valuing the benefit conferred upon the defendant rather than the loss suffered by the claimant, may exceptionally apply, presenting its own quantification challenges.

Contract terms

As a general rule, at common law title to items of plant brought onto a site for the purposes of executing and completing construction works, remain with the owner throughout.^[2]See, for example, Kerr v. Dundee Gas Co. (1861) 23 D. 343, holding at p. 349 in relation to an anticipated but in the event unexecuted contract for the construction of a gas-holder tank providing … Continue reading

Employers will naturally however be keen to ensure that a construction project which they have commissioned is not adversely impacted by the untimely redeployment or removal of plant needed to carry out that work. This is in the normal course most efficiently achieved through contract. Matters can be made significantly more complicated by vesting or transfer of ownership provisions. Historically, critical nodes have been: delivery of the plant to site, suspension or termination of further performance of the works, and insolvency. Interpretation of the relevant contract terms can then assume paramount importance. Effective flow-down provisions may be essential in contracts of supply or subcontracts to ensure that those rights are enforceable all the way down the contractual chain.

Contractual provisions which collide with the general law on insolvency throw up special challenges, with English law traditionally setting its face against the parties’ ability to contract out of the relevant legislation. This is captured in the leading speech of Lord Collins in the UK Supreme Court in Belmont Park Investments Pty Ltd v BNY Corporate Trustee Services Ltd.^[3][2011] 3 WLR 521. by reference to two sub-rules:

• (from [2] to [5] in Lord Collins’ speech) an anti-deprivation rule—designed to prevent withdrawal of assets on bankruptcy or liquidation or administration, thereby reducing the value of the insolvent estate to the detriment of creditors;^[4]For a seminal case to this effect, see Whitmore v. Mason (1861) 2 J & H 204, in which Sir William Page Wood V-C noted at p. 212: ‘… the law is too clearly settled to admit of a shadow of … Continue reading and
• (from [6] to [13] in Lord Collins’ speech) the public policy principle requiring creditors to be treated pari passu, and outlawing attempts contractually to exclude that rule by giving one creditor more than its proper share.^[5]See, for example, British Eagle International Airlines Ltd v Cie Nationale Air France [1975] 1 W.L.R. 758, HL.

Other remedial vehicles

Beyond this, parties having a legal interest in the plant but who are not in contract with those commissioning the construction work will typically be obliged to pursue their remedies extra-contractually: see, for example, the opinion of Mr Justice Day in the US Supreme Court case of United States v. Buffalo Pitts 234 U.S. 228 (1914), in which the plaintiff sold a traction engine to a contractor, subjecting it to a chattel mortgage to secure the payment of the purchase price. The contractor defaulted in its performance of a construction contract with the government. The contractor assigned the equipment that it was using in discharge of that contract, including the engine, to the government, which had at all times known of the existence of the mortgage. The plaintiff successfully sued for the government’s use in completing the construction works:^[6]On the basis of an ‘implied contract’, now discredited in English law where such an action would more likely be regarded as one based upon the unjust enrichment of the defendant. while the government was entitled under its arrangements with the contractor to take and use the plant, it could not do so by denying the right of the plant owner to compensation for its use.

Other judges have explored the possibility of purely restitutionary remedies, such in England as Lord Denning MR in England in Strand Electric and Engineering Co Ltd v Brisford Entertainments Ltd.,^[7][1952] 2 Q.B. 246; [1952] 1 All E.R. 796, CA. Other jurisdictions have explored a similar approach: see, for example, Gaba Formwork Contractors v. Turner Corp. (1993) 2 NSWLR 175 and Siew Kong … Continue reading although his fellow judges in that case preferred a more conventional, compensatory damages, approach.

This whole subject has more recently been considered by the Privy Council in Caribbean Welding Supplies Ltd v Attorney General of Trinidad and Tobago,^[8][2024] UKPC 7. involving an action against the Trinidad and Tobago Police Service which had seized and unlawfully detained, for more than two years, the appellant’s excavator. During that period the police took no steps to maintain it, and stored it in an open area, exposed to the weather. Its deteriorated condition led to a substantial depreciation in its value. A whole range of measures – which should be of interest to those involved in or charged with their valuation/quantification of recovery – was canvassed by the Privy Council.

Particular valuation challenges

Such challenges include:

• selecting an appropriate basis for measuring any additional costs that may be involved;^[9]See, generally, F. Mastrandrea, “The Evaluation of Plant Claims in Construction” [2011] The International Construction Law Review 298
• the availability of reliable objective market value data reflecting the age, condition, and wear and tear of the particular item of plant involved. This might in appropriate cases, and where it is available, be overcome by expert testimony;^[10]See, for example, 111 Scherr Lane LLC et al v Triangle General Contracting Inc et al 163 A.3d 248 (2017) in the Maryland Court of Appeals which, in endorsing the lower court’s exercise of … Continue reading
• issues of betterment;
• locating the value of potential additional loss by way of depreciation in value notwithstanding repairs;
• in cases where further performance is brought to an end before completion of the works (such as termination for cause by the Employer), how use made by the Employer of the relevant plant beyond termination is appropriately to be reflected in the settlement of accounts between the parties.

Futher, and as always, the valuer will need to be alert to the risk of potential double recovery.

Conclusion

Given the essential part played by plant in construction projects, this area of unfolding law and practice retains significant importance. For a more detailed review, see Claims for Wrongful Interference with Construction Plant shortly to be published in Issue 1 of (2025) 41 Const LJ.         

About the Author

Franco Mastrandrea is a Chartered Quantity Surveyor and Chartered Arbitrator with over 40 years of experience in the construction industry. He has acted as expert on more than 50 international project management, delay and quantum-related disputes.