Swansea Stadium Management Company Ltd v City & County of Swansea & Anor

A collateral warranty may operate retrospectively where its wording and factual matrix show that the parties intended the beneficiary to have rights coterminous with those under the underlying building contract. For a contractor’s obligation to carry out and complete works, the cause of action for defective completion generally accrues at practical completion. A contractual deeming provision may make practical completion effective for all contractual purposes despite outstanding works or defects. On a summary judgment application, the court may decide a short and sufficiently clear point of construction where the claim has no realistic prospect of success and there is no compelling reason for trial.

The claimant, the leasehold owner and operator of the Liberty Stadium, claimed approximately £1.3 million from the contractor for defective flooring and paintwork. The claims were advanced under the building contract and a collateral warranty. The contractor applied for summary judgment or strike-out, contending that the original construction claims were statute-barred because practical completion was deemed to have occurred on 31 March 2005, whereas proceedings were issued on 4 April 2017. Claims concerning obligations to remedy defects under clauses 16.2 and 16.3 were not subject to the limitation defence.

The central issues were whether the collateral warranty operated retrospectively, whether practical completion occurred on the deemed contractual date, and whether the issues should be determined summarily.

1. Summary judgment test. The court applied the principles stated in Global Asset Capital Inc v Aabar Block SARL [2017] EWCA Civ 37. The claimant required a realistic, rather than fanciful, prospect of success. The court should avoid a mini-trial, but should decide a short point of law or construction where it had the necessary evidence and the parties had a proper opportunity to address it. There must also be no other compelling reason for trial.
2. Retrospective effect. A deed may operate retrospectively where that is the parties’ express or implied intention. The collateral warranty referred to the contractor’s past and future performance, arose from the building contract, and limited the contractor’s liability to that which it would have had if the claimant had been a joint employer. Those features showed an intention that the claimant’s rights and the contractor’s liability should be coterminous with the underlying building contract.
3. Accrual and practical completion. A contractor’s cause of action for failure to carry out and complete works properly generally accrues at practical completion, subject to any further cause of action created by defects-liability provisions. Clause 16.1 made practical completion depend on the employer’s reasonable opinion and written statement, and provided that it was deemed to have occurred on the stated date for all purposes of the contract.
4. The existence of patent defects, outstanding works or continuing remedial work did not prevent the contractual deeming provision from operating. The employer’s statement therefore deemed practical completion to have occurred on 31 March 2005. The original construction claims were consequently statute-barred when proceedings were issued in April 2017.
5. The original construction claims were discrete and the limitation issue was sufficiently clear to be determined before trial. Summary judgment was granted on those claims, the relevant paragraphs of the Particulars of Claim were struck out, and the collateral-warranty claims were confined to the alleged breaches corresponding to the clause 16 claims.