Estates Gazette quotes Francis Ho on the case of Abbey Healthcare v Simply Construct

Ahead of a Supreme Court ruling on a case between a contractor and a leaseholder, Francis Ho, Partner in our Construction, Engineering & Projects team, comments in an article by Estates Gazette on the significance of the ruling and wider case.

The dispute is between construction company Simply Construct (UK) LLP and care home provider Abbey Healthcare. Simply Construct built the Aarandale Manor care home, which is in the London suburb of Mill Hill, in 2016. In 2017, Abbey took on the long lease and in 2018 fire safety defects were discovered which were rectified by another contractor.

According to an earlier ruling in the case, after pressure from the freeholder Simply entered into a collateral warranty agreement with Abbey agreeing that it “has performed and will continue to perform” all of its obligations under the original building contract.

From this initial disagreement, the dispute made its way to the courts before reaching the Supreme Court. The case will now be heard by a five-judge panel on 29 April.

In the article, Francis comments on some of the key considerations ahead of the hearing.

"Why is this such a concern? It’s because, under a construction contract, each party has an automatic right to refer a dispute to adjudication. That’s fast, pretty cheap and, due to those plus other reasons, mostly unattractive to warrantors, who tend to be on the receiving end. They’d rather defend a claim in the courts or in arbitration."

Francis explains that while it has already been established that collateral warranties, in certain circumstances, can be considered to be construction contracts, there is some uncertainty about whether this applies if, as in this case, the work has been completed before the warranty is granted.

Read the full article in Estates Gazette here (subscription required).