Parkwood Leisure Ltd v Laing O’Rourke Wales and West Ltd

Citation: All ER (D) 221 (Aug); [2013] CILL 3413; [2013] BLR 589; 150 Con LR 93; [2013] EGLR 6

Nature of case:
The Court was required to determine whether a collateral warranty was a “construction contract” within the meaning of section 104 of the Housing Grants, Construction and Regeneration Act 1996.  The issue had not previously been considered by the courts despite the Act having been in force for 15 years.

The warranty in question was given by Laing O’Rourke to Parkwood, the tenants of the Cardiff International Pool, concerning Laing O’Rourke’s construction of that facility.  At the time that the warranty was given the project was largely complete but practical completion had not yet been certified.  There was therefore some further work to be done, as well as the remedying of any post PC defects which would necessarily take place during the tenant’s occupancy of the site.

Akenhead J ruled that whether a given contract was a “construction contract” had to be determined by reference to the terms of the contract itself, and in line with ordinary principles of contractual interpretation.

The fact that a contract is retrospective in effect is not a bar to it being a construction contract.

Where (as was the case here) one party to a contract agrees to “carry out and complete” construction operations, it will usually (and possibly invariably) be an agreement “for the carrying out of construction operations”.  Note that the relevant text of the warranty corresponded with the wording of the underlying building contract which was on a standard JCT design and build form.

In light of the particular words used in the collateral warranty, Akenhead J found that there was no doubt that this particular collateral warranty was to be treated as a construction contract under section 104.

Link to Judgment

Counsel

Justin Mort QC

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