Collateral Warranties And Adjudication

The recent case of Parkwood Leisure Ltd v. Laing O'Rourke Wales and West Ltd looked at whether adjudication proceedings can be instituted in respect of claims arising under a collateral warranty. The issue that had to be decided was whether a collateral warranty could amount to a construction contract for the carrying out of construction operations within the meaning of the Housing Grants, Construction and Regeneration Act 1996 (the Construction Act). This case will be of interest and possibly potential concern to those entering into collateral warranties.

The facts of the case were that a dispute arose in relation to a swimming and leisure facility in Cardiff. Parkwood provided facilities management for the pool and, before the works were completed, a collateral warranty was executed between Parkwood and Laing. There were a number of alleged construction and commissioning defects and, although a settlement agreement was entered into, Parkwood sought to enforce its