Toppan Holdings Ltd & Anor v Simply Cons

Toppan Holdings Ltd & Anor v Simply Construct (UK) LLP

Citation: [2021] EWHC 2110 (TCC)

Background Facts

Simply Construct built Aarandale Manor Care Home under a JCT Design and Build Contract (c. £4.7 million).
Practical completion was in October 2016. Toppan later discovered serious fire safety defects in 2018.
Remedial works were carried out by others in 2019–2020.
A novation transferred the building contract from Sapphire to Toppan in 2017.
In October 2020, after significant delays and pressure, Simply signed a collateral warranty in favour of Abbey.
Abbey and Toppan commenced separate adjudications in 2020 seeking damages for defects.
Toppan adjudication: Toppan awarded £1.07 million for remedial works and costs.
Abbey adjudication: Abbey awarded £908,495 for loss of trading profit.
Toppan and Abbey sought summary judgment to enforce the adjudication awards.

Toppan adjudication:
- The court enforced the Toppan adjudicator’s award in full.

Abbey adjudication:
- The court held that Abbey’s collateral warranty was not a “construction contract” under the Housing Grants, Construction and Regeneration Act 1996, section 104.
Therefore, the adjudicator lacked jurisdiction in Abbey’s adjudication, and enforcement was refused.

Key points:
- The Abbey warranty was signed four years after practical completion and after all remedial works had been completed.
- The warranty was mainly a warranty of past performance rather than an agreement for carrying out future works, meaning it did not fall within the Act’s definition of a “construction contract.”

Interest and VAT:
- The court upheld the adjudicator’s award of interest and VAT in Toppan’s case as no jurisdictional objections were raised.
- The court found Toppan was entitled to VAT recovery.

Stay of execution:
- Simply requested a stay of execution, alleging that Toppan and Abbey might not be able to repay the sums if overpaid.
- The court rejected the stay application for Toppan, finding Toppan financially sound.
- The Abbey claim was not enforced, so no stay issue arose.

Collateral warranties and adjudication rights:
- Not all collateral warranties are “construction contracts.” A warranty is unlikely to be a construction contract if:
  - All works are completed long before execution.
  - It merely warrants past performance rather than promising future construction obligations.

Timing matters:
- Execution timing is critical. A warranty given after completion and after remedial works are finished will usually be treated as only confirming a past state of affairs.

Jurisdiction objections:
- Objections to adjudicator jurisdiction (e.g., whether an agreement is a construction contract) must be properly raised. Otherwise, participation may imply acceptance of jurisdiction.

Enforcement approach:
- Courts strongly support enforcing valid adjudicator decisions swiftly to preserve cash flow, reflecting the “pay now, argue later” principle.

Stay of execution tests:
- Financial ability to repay is a key consideration.
- Even where a claimant has a questionable financial history, evidence of group support and stable trading can defeat stay applications.