This morning I ended up in a lively discussion over breakfast about who ‘owned’ the cat in the photo.
Apparently, when we had first agreed to adopt this cat, I had said to middle son that she would be his cat. But I feed her, clear up after her, take her to the vet etc. All he does is let the cat sleep on his bed for an hour a night…
Now this ‘discussion’ is largely one of semantics. But what about when it comes to plant, materials, equipment or goods on a construction site? Then it does matter.
Who Owns Materials on a Construction Site?
There are two types of materials we need to consider: they are called fixed and unfixed.
Fixed goods: as soon as goods or materials are attached to the land, whether directly – such as dug into the ground – or indirectly – window frames, attached to brickwork which is attached to the foundations – then those goods or materials belong to the landowner. No retention of title clause can affect this principle of property law.
Unfixed goods, plant or equipment: In Alstom v Somi  the court had to try and separate the emotions, moral rights and contractual rights on a subcontract which had gone badly wrong. The contractor had terminated the subcontract, and subsequently tried to prevent the subcontractor from returning to the site to reclaim its plant and equipment. The police had become involved!
The dispute arose partly because the contract provided that the Subcontractor’s Equipment (as defined) was “deemed” to be the property of Alstom until completion. Based on the Re Cosslett decision from 2007, the court stated that:
- the terms of the relevant contracts were the main, but by no means only, way of passing possession or ownership of subcontractor plant, equipment, materials or goods;
- the court has to decipher the contract terms to decide whether such items are supplied by one party to or for the benefit of the other;
- ownership will only pass permanently where there are crystal clear words to that effect.
In this case, the contract said that the items were “deemed” to become the property of the contractor (and the parties had agreed that this was the correct interpretation of the clause).
The court had then to consider whether there were other terms in the contract which ‘cast light’ on the purpose, extent and duration of the deemed ownership clause. What was still up for debate was whether the deemed ownership was temporary or permanent. This mattered as by now the subcontractor was insolvent and the plant and equipment were assets in its liquidation.
The court had to be satisfied that both parties intended that the transfer of ownership was permanent. The court held this was not the case, but that Alstom did have (interim) possessory rights over the equipment until completion of the works, and could rightly prevent the subcontractor from attempting to re-take its assets for a limited period.
For suppliers: although a robust retention of title clause, combined with proper marking of your goods can help, once the materials are paid for or fixed to the development then you cannot get them back. Keep on top of payment problems wherever possible. Also check you have read what the contract says about who can use and ‘own’ your plant and equipment after the contract has been terminated before the project is finished. It may come as a surprise!
For employers: do not use plant and equipment if you have no ownership or title to it. That is an offence.