Case update
[2024] UKSC 23
We reported on this case in Issues 254 and 265. 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.
The Supreme Court unanimously disagreed. The collateral warranty here was not a construction contract, and, further, most collateral warranties would not be considered a construction contract capable of conferring the right to adjudicate under the HGCRA. A construction contract under the HGCRA is defined as an agreement "for ... the carrying out of construction operations". In determining whether a construction contract exists, a tribunal must, therefore, assess whether "'the object or purpose' of that contract is the carrying out of construction operations". In the opinion of the Supreme Court, it was "difficult to see" how most collateral warranties could be assessed in that way.
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