Abbey Healthcare (Mill Hill) Ltd v Simply Construct (UK) LLP

[2022] EWCA Civ 823

We reported on this case in Issue 254.

Note: Decision over-turned by the Supreme Court. See Issue 290.

At first instance, the Judge said that “applying commercial common sense,” it was difficult to see how a collateral warranty executed four years after practical completion, and months after the disputed remedial works had been remedied by another contractor, could be construed as an agreement for carrying out of construction operations. By a split majority, the CA disagreed, holding collateral warranties can be “construction contracts” for the purposes of the HGCRA. 

That is, of course, depending on the words used and right conferred. In short, where a collateral warranty is simply a fixed promise or guarantee about a past state of affairs, then this is unlikely to be a construction contract. However, where the warranty makes reference to a contractor “carrying out” or “continuing to carry out construction operations,” then this could be a contract “for the carrying out of construction operations” under the HGCRA.

Further, what was important was the actions that were a part of the warranty, not the timing. If part of the warranty talks about future performance, then this may be enough for the warranty not to be a construction contract. That was not the case here, however and Abbey was able to enforce the adjudication decision.

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