A Case review: Insurance Insight

7 May 2024

A Case review: Insurance Insight

a man holding a construction hat

The new 2022 Building Safety Act can cause a lot of businesses if they are not insured properly to fit within the new guidelines of the act, an example of a business being caught out by the new guidelines is Simply Construct…..

Abbey Healthcare (Mill Hill) Ltd (“Abbey”) v Simply Construct (UK) (“Simply”) [2022]

  • Under JCT D&B 2011 Simply were appointed to build a care home. Under the D&B contract Simply had an obligation to provide Toppan and any tenant with a collateral warranty.
  • Toppan discovered fire safety defects in the walls and Simply were instructed to rectify them, but Toppan needed to instruct another contractor to carry out those specialist repairs.
  • Abbey was a long-lease tenant and in the collateral warranty provided to them by Simply, it was stated that Simply had performed and would continue to perform its obligations under the Building Contract diligently
  • Following adjudication proceedings in Toppan and Abbey’s favour, Simply resisted enforcement on the basis that the collateral warranty was not a “construction contract” for the purposes of the Housing Grants, Construction and Regeneration Act.
  • The Technology and Construction Court agreed with Simply confirming that “where the works have already been completed, and as in this case even latent defects have been remedied by other contractors, a construction contract is unlikely to arise and there will be no right to adjudicate” but the decision was appealed.
  • The Court of Appeal overturned the High Court judgment finding in favour of Abbey.

This is a perfect example of how limited insurance cover can have major ramifications on a business in the future. 

This decision may represent a significant extension of liability for contractors and consultants alike and you will need to speak to your insurance advisor to understand the coverage implications that this decision may have.

That’s where we can help. At Vista we have worked hard to create a new insurance service to help our clients in the property and construction industries get the cover they need.