Case 8: Toppan Holdings Ltd and Abbey Health Care (Mill Hill) Ltd v Simply Construct (UK) LLP [2021] EWHC 2110 (TCC) 27 July 2021 Martin Bowdery QC – Right to Adjudicate – whether collateral warranty is construction contract Sapphire contracted with Simply to design and build a residential care home in 2015. The building contract provided for a collateral warranty to a future tenant. Sapphire novated the building contract to Toppan who granted a lease to Abbey who then operated the care home. Simply executed a collateral warranty in favour of Abbey. In 2019 significant fire safety defects were discovered and subsequently rectified at considerable expense. Toppan started an adjudication against Simply to claim remedial costs under the novated building contract and Abbey started an adjudication to claim damages for loss of income against Simply pursuant to the Act on the basis that the collateral warranty was a ‘construction contract’ i.e. one for “construction operations”. The same adjudicator was appointed in each case and he made awards in favour of Toppan and Abbey which they sough to enforce.
(b) in carrying out and completing the Works the Contractor has exercised and will continue to exercise all the reasonable skill care and diligence to be expected of a, properly qualified competent and experienced contractor experienced in carrying out and completing works of a similar nature value complexity and timescale to the Works; in carrying out and completing any design for the Works the Contractor has exercised and will continue to exercise all the reasonable skill care and diligence to be expected of a prudent, experienced competent and properly qualified architect or as the case may be other appropriate competent and qualified professional designer experienced in carrying out and completing the design for works of a similar nature value complexity and timescale to the Works.” (c) In the Abbey adjudication, Simply maintained a challenge against the adjudicator’s jurisdiction: they said the collateral warranty was not a construction contract and there was no right to adjudicate the dispute arising under it.
In Parkwood Leisure[6], Akenhead J said:
“(a) The fact that the construction contract (if it is one) is retrospective in effect is not a bar to it being a construction contract. It is common for contracts to be finalised after the works have started and to be retrospective in effect back to the date of or even before commencement. If that is what the effect of the parties' agreement is, then that cannot prevent it from being a construction contract for the carrying out of construction operations. Put another way, a construction contract does not have to be wholly or even partly prospective.
The warranty was a bespoke form in which Simply warranted as follows:
“ (a) the Contractor has performed and will continue to perform diligently its obligations under the Contract;
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[6] Parkwood Leisure v Laing O’Rourke [2013] B.L.R. 589
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