Cases - Smith (as Administrator of Cosslett Contractors Ltd.) v Bridgend County Borough Council
Record details
- Name
- Smith (as Administrator of Cosslett Contractors Ltd.) v Bridgend County Borough Council
- Date
- [2001]
- Citation
- 1 BLR 160 HL
- Legislation
- Keywords
- Insolvency
- Summary
-
This case provides an example of where a clause enabling the employer to retain and sell the contractor's plant on the insolvency of the contractor is a charge requiring registration.
Bridgend Borough Council ('Bridgend') entered into an ICE (5th edition) contract with Cosslett for the rehabilitation of an area disfigured by coal dumps. This involved the use of two coal washing plants (worth about £1.8m) to separate the usable coal from the residue. The standard ICE condition 63 provided that if Cosslett went into liquidation or abandoned the contract, the plants (and any other materials) would be deemed to be the property of Bridgend who could use the plants to complete the contract and then sell the plant and apply the proceeds towards any sums due from Cosslett. During the contract, Cosslett abandoned the site and went into administration. Bridgend engaged another contractor to continue the works on terms that the new contractor could use the plants and would become the owners of them. The administrator brought proceedings against Bridgend for conversion (i.e. wrongful possession and sale) of the plants.
It was held by the House of Lords that condition 63 purported to give Bridgend the right to sell assets belonging to Cosslett and to apply the proceeds towards payment of sums due from Cosslett to Bridgend. That amounted to a charge that had to be registered under section 395 of the Companies Act 1985. Bridgend did not register the charge. The charge was therefore void as against the administrator and against Cosslett in administration. Bridgend had no right to retain or sell the plants after Cosslett entered administration and in doing so was converting Cosslett's assets. Cosslett was entitled to judgment against Bridgend for conversion with damages to be assessed.