Abbey Healthcare (Mill Hill) Ltd v Simply Construct (UK) LLP [2022] EWCA Civ 823 (21 June 2022)

This Court of Appeal case concerned whether a collateral warranty given by a construction firm was not a construction contract within the meaning of the Housing Grants, Construction and Regeneration Act 1996, s.104(1). The collateral warranty provided that, in respect of its works at a care home, the Respondent warranted that it “has performed and will continue to perform diligently its obligations under the [Building Contract]”. The Appellant was successful in an adjudication against the Respondent in respect of defects at the care home. The Respondent resisted enforcement on the basis that a collateral warranty was not a construction contract. The first instance Judge agreed with the Respondent. The Court of Appeal overturned this (Stuart-Smith LJ dissenting). The majority found that a collateral warranty could, be construed as a construction contract, depending on whether it was in respect of the ongoing carrying out of construction operations, or in respect of past and static affairs. There was no reason to construe the requirement in s.104(5) of “an agreement for the carrying out of construction operations” of the 1996 Act narrowly. The instant collateral warranty included an obligation to “continue to perform” the obligations under the Building Contract and therefore was an agreement for the carrying out of construction operations.