Commercial Disputes Weekly – Issue 21316 July 2024

Construction – Adjudication
The Supreme Court has concluded that a collateral warranty is not a construction contract for the purposes of section 104 of the Housing Grants, Construction and Regeneration Act 1996. Simply was the contractor engaged to design and build a care home and provided a collateral warranty to Toppan, to whom the building contract was novated and Abbey, as tenant of the property. Toppan and Abbey referred disputes to adjudication in relation to fire safety defects, but the resulting adjudication award in favour of Abbey was not enforced by the court on the grounds that the adjudicator lacked jurisdiction because the collateral warranty given to Abbey was not a construction contract. The Supreme Court held that a collateral warranty was not an agreement “for” the carrying out of construction operations if it merely promises to perform obligations that are owed by someone else under the construction contract.
Abbey Healthcare (Mill Hill) Ltd v Augusta 2008 LLP (formerly Simply Construct (UK) LLP) [2024] UKSC 23, 9 July 2024

For a more detailed discussion of the judgment, see our article here.

Contract Interpretation
The Chancery Court has held that a provision in a shareholder agreement that required a party not to “assign… or deal in any way with any of its rights under this agreement” without written consent did not prevent those rights being transferred by informal novation. The interpretation of the clause was that one party could not unilaterally transfer its rights, for example, by assignment. A novation was a consensual agreement involving both parties. If the court was wrong on that point, it would have found that the defendant had waived any right to rely on the requirement for consent because of its agreement in relation to the transfer of shares.
Magee and others v Crocker and other [2024] EWHC 1723 (Ch), 5 July 2024

Maritime
The Commercial Court has resolved a dispute about the interest accruing and owed by a guarantor in relation to termination hire payments under two bareboat charterparties. Liability for the termination sums was established but interest was disputed. The court held that the guarantor’s liability for interest accrued on demand, at 8% initially and then limited to 4% after that. The claimant shipowners were able to serve multiple demands for interest as it accrued and then the 8% rate applied until date of demand and 4% thereafter.
SY Roro 1 Pte Ltd v Onorato Armatori SRL [2024] EWHC (Comm), 5 July 2024 (judgment not publicly available)

Agency
In a dispute arising out of a contract to supply face masks, the Chancery Court held that the buyer’s agent had specific or apparent authority to agree amended delivery deadlines. The buyer could not rely on the failure to achieve the original contractual deadlines as a reason not to pay for the masks. The buyer’s refusal to pay for the masks was then an anticipatory breach which the seller had accepted. There had been a period when the seller was deciding how to respond to this breach, but that did not mean that affirmation of the contract was a default position. The seller’s conduct indicated that they were accepting the breach and they were entitled to damages at that date.
Advanced Multi-Technology for Medical Industry and others v Uniserve Ltd and others [2024] EWHC 1725 (Ch), 4 July 2024

Should you wish to discuss any of these cases in further detail, please speak with a member of our London dispute resolution team below, or your regular contact at Watson Farley & Williams: