Fahstone Ltd v Biesse Group UK Ltd

A contract for supplying and installing substantial machinery is a construction contract only if the installation involves construction operations within the statutory definition. Whether machinery forms part of the land is a question of fact and degree. Relevant factors include its size, fixings, purpose, permanence, integration with other equipment and ease of removal. Bolting machinery to a floor is a strong, but not conclusive, indication that it forms part of the land. A stand-alone machine designed to be removed and resold may remain a chattel. Where the evidence leaves a triable issue on these matters, summary judgment enforcing an adjudicator’s decision should not be granted.

Fahstone applied for summary judgment to enforce an adjudicator’s decision awarding £125,000 for software defects and £14,000 for delay arising from the supply and installation of a CNC woodworking machine. Biesse had paid the sum for delay but disputed the balance, arguing that the adjudicator lacked jurisdiction.

Biesse contended that the agreement was not a construction contract under Part II of the Housing Grants, Construction and Regeneration Act 1996, and that Fahstone was not a party because the machine had been financed through ING. The central issues were whether Fahstone was entitled to enforce the agreement and whether installation of the machine constituted a construction operation.

1. Contractual standing. Fahstone was a party to the Uniwin Agreement. The later transfer of title to ING did not affect Biesse’s contractual obligations to Fahstone. In any event, Biesse ratified the arrangements by its later invoice and credit note. The argument that Fahstone was not entitled to enforce the agreement was hopeless.
2. Statutory framework. Under Part II of the Housing Grants, Construction and Regeneration Act 1996, the question was whether installation involved a construction operation under section 105. The court adopted the fact-sensitive approach summarised in Savoye and Savoye Ltd v Spicers Ltd [2015] BLR 151. Whether an object forms part of the land depends on fact and degree, informed by but not determined by the law of fixtures. Regard should be had objectively to purpose, permanence, the nature of the installation as a whole and ease of removal.
3. The Uniwin was substantial, assembled on site and intended to remain in one place. It could therefore fall within “structure” in section 105 and could also properly be described as industrial plant. Fixing it to the floor was a factor pointing towards its forming part of the land. However, it was a stand-alone machine, the fixings were principally intended to prevent vibration, the machine had a second-hand market and it could potentially be removed without damaging the machine.
4. Following the view and hearing, the court initially concluded that the Uniwin did not form part of the workshop and that its installation was not a construction operation. Further evidence concerning additional fixings, however, created doubt about the nature and extent of the permanent attachment.
5. Fahstone bore the burden of establishing the factual basis for summary judgment on the balance of probabilities. Since there was at least a triable issue on the construction-operations question, Biesse was entitled to unconditional leave to defend. The application was therefore not granted.