England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
HIS HONOUR JUDGE ANTHONY THORNTON QC

		Royal Courts of Justice Strand, London, WC2A 2LL
		16th July 2003

 


Mr Justice Nelson:

1. This is an appeal by Northern & Shell plc, the Claimants, against the decision of His Honour Judge Thornton QC of 4 October 2002 in which he granted the application for summary judgment by John Laing Construction Limited, the Defendants, and dismissed the Claimants action upon the basis that all the claims brought by them under a Deed of Warranty dated 16 January 1990 were statute barred.
2. The dispute arises out of the construction of an office block originally known as Merchants House, but now known as Northern & Shell Tower, at Cityharbour, Millwall Dock, Tower Hamlets E14. Merchants House was one of two office blocks constructed between May 1987 and 1989 by the Defendants, John Laing Construction Limited, the contractor, under a main contract dated 10 February 1988. As a term of this building contract with the developer, the Brunel Centre Limited, John Laing Construction Limited were obliged to enter into warranties under seal in a form reasonably required by, amongst others, the initial occupational tenants who agreed terms of 15 years or more.
3. The original leaseholders were Stockley Academy Limited who, on 23 May 1989, purchased a long leasehold interest in excess of 15 years from the developer. In compliance with the terms of the main contract John Laing Construction Limited entered into a Deed of Warranty with Stockley Academy Limited on 16 January 1990. By this deed, John Laing Construction Limited covenanted and undertook with the purchaser, Stockley Academy Limited that it had complied and would at all times duly comply with the terms of the main contract. The 'Purchaser' under the deed is deemed to include its successors in title and assigns. Northern & Shell plc which now leases and occupies the Northern & Shell Tower is a successor in title of Stockley Academy Limited and hence a purchaser under Clause 4 of the Deed of Warranty of 16 January 1990.
4. The development consisted of two blocks and certificates of practical completion were issued on 16 January 1989, 8 May 1989 and the final certificate in respect of the external works on 25 August 1989. The defects period under the main contract therefore ran until August 1990. The Claimants alleged that the cladding of windows, roof coping and weatherproofing of the Northern & Shell Tower was not effective, airtight or thermally secure as a result of the defective construction of features provided by the cladding subcontractor. As a consequence, poor insulation, rattling of the cladding panels in the wind and moisture penetration into the construction blocks occurred. The Claimants allege that these defects arise as a result of breach by John Laing Construction Limited under the building contract and hence under the warranty deed.
5. The question which arose on the Defendant's application was whether the cause of action accrued on the date when the warranty was signed, namely 16 January 1990, or on the date when clause 5 of the Deed of Warranty stated that the deed came into effect, namely on the day following the date of issue of the certificate of practical completion, that is 26 August 1989. As the limitation period for the Deed of Warranty and building contract, both of which were under seal, was 12 years, that limitation period had expired when proceedings were commenced if the cause of action accrued on 26 August 1989 but had not expired if it accrued on 16 January 1990. The judge held that the effect of clause 5 was to backdate the deed to one day after the certificate of practical completion, hence making it have retrospective effect including the date when time started to run under the statutory limitations. Accordingly he found that the limitation period had expired and the claims were statute barred.

The Deed of Warranty

6. The agreement was made on the 16^th January 1990 with the original date on the draft of 1989 deleted. The agreement is between John Laing Construction Limited and Stockley Academy Limited and states:-

"WHEREAS:

(A) By a contract ('the Contract') referred to in the First Schedule hereto the Brunel Centre Limited appointed the contractor to carry out works for the construction of two office blocks at Cityharbour Isle of Dogs London Borough of Tower Hamlets.. and in particular that part of such Works (herein after called 'the Development') relating to the construction of Merchant's House at Cityharbour aforesaid and ancillary works.

(B) The purchaser has purchased a Lease of Merchant's House from the Brunel Centre Limited

NOW THIS DEED WITNESSETH as follows:

1. All references to 'the Contract' herein shall be deemed to mean the Contract in so far as it relates to the Development.

2. The Contractor hereby covenants and undertakes with the purchaser that:-

2.1 That it has complied and will at all times duly comply with the terms of the Contract

2.2 It has exercised and will continue to exercise all reasonable skill and care which may be expected of a contractor in relation to the Development and in the performance of its duties under the Contract and under this Agreement

2.3 It will provide such information and copies of documents relating to the works to be carried out under the Contract as may be reasonably requested by the Purchaser in writing and which are in the possession of the Contractor

2.4 To the extent that the Contractor has selected or will select materials or goods for the Development they are or will be of good quality and will satisfy any performance specification or requirement which is included or referred to in the Contract..

4. References in this Agreement to 'the Purchaser' shall be deemed to include its successors entitled and assigned

5. This Deed shall come into effect on the day following the date of issue of the Certificate of Practical Completion under the Building Contract for Merchant's House."

7. The building contract is identified in the First schedule as being that of 10 February 1988 between the Brunel Centre Limited and the contractor.
8. The Deed of Warranty was drafted and intended to be signed before the date of issue of the Certificate of Practical Completion. This is clear not only from the wording of clause 5 itself but from the fact that the contractor covenanted and undertook that it had complied with and would in the future comply with the terms of the building contract; that it had exercised and would continue to exercise reasonable skill and care; that it would provide information and documents, and that materials selected by it were and would be of good quality. (2.1, 2.2, 2.3 and 2.4 of the Deed.) The watershed, as the judge described it, between past and future performance was defined by clause 5 as being the day immediately following the date of the certificate of Practical Completion. That was the day when the warranty deed stated that it 'shall come into effect'. The wording of the deed however was drafted as if that watershed date between past and future performance had not yet taken effect although in fact the deed was signed some months after practical completion.
9. The parties must therefore have intended, the judge found, that the deed should take effect in the future. The parties must have envisaged that the warranty deed would be entered into before practical completion but soon after the lease had been signed and that the contractor's promises were to take effect on the day immediately following the date of the Certificate of Practical Completion.
10. Although the parties did not sign the warranty deed until some months after the Certificate of Practical Completion the language of the deed was not amended and clause 5 still referred to the date on which the deed was to take effect as being in the future rather than was in fact the case, some four and a half months earlier.
11. The judge's conclusion that the parties had intended that the Deed of Warranty would be signed before the date of the Certificate of Practical Completion is clearly correct. It is relied upon by the Appellant and not challenged by the Respondent.

The Building Contract.

12. This was in the JCT Private With Quantities Form of Building Contract and was entered into under seal between the Developer, the Brunel Centre and John Laing Construction Limited. Clause 56 of the schedule of amendments to the Conditions inserted a new clause 45 which read as follows:-

"45.1 The Contractor agrees at the written request of the employer to answer all questions and to supply copies of all documents reasonably requested by any Entitled Party here meaning;

45.1.1 any bankers or financial institutions of the Employer;

45.1.2 any initial investment owners and their mortgagees;

45.1.3 initial occupational tenants for terms of 15 years or more

and the Contractor further agrees to enter into all Warranties under seal in the form reasonably required by any Entitled Party. Subject as mentioned below not more than one Warranty would be provided in respect of each building comprising Phase I and each investment sale unit in the case of Phase II and Phase V. The Contractor will not in any such Warranty be required to give any greater undertaking than that contained in this Contract."

13. The contractor was therefore obliged to enter into a warranty in the form reasonably required by the original leaseholder, Stockley Academy Limited. Such a warranty was deemed to include the successors in title and assigns of the original leaseholder. (Clause 4 of the Deed.)
14. The defects period under the building contract expired 12 months after the date of the Certificate of Practical Completion, that is in August 1990 in so far as the external works were concerned.

The Judgment.

15. The judge found that the deed was unambiguous in its terms. It came into effect, by virtue of the provisions of clause 5, on the day following the date of the issue of the Certificate of Practical Completion. At that date the warranties came into effect.
16. The submission that the clause was not intended to and could not have retrospective effect was rejected. Whilst a collateral obligation such as a warranty or guarantee may run for a longer period than the underlying obligation being guaranteed or warranted (Carter v White [1883] 25 ChD 666) that was not so on the facts of this particular case.
17. The parties to the warranty deed had clearly intended that the warranties would take effect in their entirety at the same time as any relevant underlying event occurred and any consequent breach of the building contract took effect. They envisaged that the warranty deed would be entered into before practical completion and would then take effect at Practical Completion under that contract. They intended not to create an obligation under the warranty deed which lasted longer than the underlying obligation it supported but rather, to create obligations and causes of action under the building contract together with collateral obligations and causes of action under the warranty deed, which crystallised simultaneously, and took effect by the same period of time.
18. The words of the building contract and warranty deed both showed that that was the sequence of events intended and the fact that the parties failed to enter into the deed at the intended time was immaterial. They still intended that the deed would take effect, as stated in clause 5 of the Deed, from the date after the issue of the Certificate of Practical Completion, not on the date when the deed was signed.
19. Whether or not parties intended a contract or deed under seal to take effect retrospectively depended upon the intention of the parties. Such intention could be provided for by the words of the contract or deed itself or by way of necessary implication from surrounding circumstances and business efficacy.
20. Whilst an intention that a contract or deed is to have retrospective effect is more readily to be seen where there is a prior contractual relationship between the parties in question such a relationship is not a condition precedent to retrospective effect. There is no basis on the authorities for concluding that the operation of the retrospectivity principle has to be limited to situations where the parties had a preceding contractual or commercial relationship. In any event on the facts of this particular case there was a relationship between John Laing Construction Company Limited and Stockley Academy Limited which is equivalent to a contractual relationship by virtue of the terms of the building contract and the third party rights it conferred on the long lessee.
21. The parties had chosen the watershed between past and future performance as at one day after the date of issue the practical completion certificate with care, since practical completion was also the event provided for in the building contract when John Laing Construction Limited's obligations to carry out and complete the works were replaced by the obligations to remedy defects during the defects liability period.
22. The developer also retook possession on that day.
23. The deed came into effect therefore not upon the date when it was signed on the 16 January 1990 but in accordance with the clear meaning of clause 5 and the intention of the parties, on the day following the issue of the Certificate for Practical Completion. Accordingly the claims were statute barred.

The Appellant's submissions.

24. This was a simple contractual deed of warranty. There was no basis for treating it as anything other than a simple contract. You cannot have a contractual cause of action before you can have a contract, thus the cause of action arose on 16 January 1990 the date when the contract, that is the Deed of Warranty, was signed.
25. The warranty here was that the building had been properly built. It was a fresh promise made on the date that the warranty was signed.
26. Whilst it is possible to stipulate a time bar on a simple contract this could only be done if it was done without ambiguity and that was certainly not the case here. Clause 5 cannot be read as a limitation clause as it specifies no limitation, and provides no period in which claims must be brought, nor any clear cut off date.
27. By finding that the clause had a retrospective effect, the judge was unnecessarily complicating a simple contract. He introduced concepts of building contracts into the Deed of Warranty when that was inappropriate. A retrospective effect can only be implied in complicated cases rather than in simple contracts. There was no reason for any of the implications which the judge found; indeed this was a simple contract which operated effectively as a warranty such as that given by a manufacturer to a purchaser in the sale of a television. Where such a warranty to a purchaser was given by a manufacturer, the relationship between that manufacturer and the retailer of the goods who sold them to the purchaser is irrelevant. In this case, by analogy, the relationship between the contractor and the developer is also irrelevant.
28. The fact that the Deed of Warranty was drafted before practical completion and hence intended to take place in part in the future is of particular importance in this case where the warranty was in fact signed after practical completion. The warranty holder could not sue until after the date of signature. As the words of clause 5 were not amended, they had no real effect at all. The clause was effectively redundant because of the different circumstances which then applied. The clause was simply not drafted to deal with the situation which in fact had occurred, namely that it had been signed after rather than before practical completion, so that it no longer had any true meaning.
29. However if meaning had to be given to it, that meaning was clear. Clause 5 still served the limited purpose of ruling out any breaches which both predated and were cured by the date of practical completion. The wording contemplated a situation in which the deed had been agreed and signed, but practical completion not yet taken place. It was therefore drafted to exclude the possibility that the purchaser, irritated by a serious delay or unremedied item of defective work before practical completion, could take proceedings under the deed. Clause 5 ensured that that would never happen. Even where the deed was executed after practical completion clause 5 remained of importance and effect because it identified a cut off date which prevented any claim for delay or other claim relating to events before practical completion being raised by the purchaser. Indeed it was the only part of the deed which operated to limit the very broad wording of clause 2.
30. There is no reason why a collateral obligation such as a warranty or guarantee should not run for a longer period than the underlying obligation being guaranteed or warranted. Carter v White [1883] 25 Ch D 666.
31. The Deed of Warranty provided a fresh promise upon which the purchaser or its successors or assigns could sue in respect of both past and future breaches. The fact that the contract was expressed in the present tense indicated that it was a fresh promise, inconsistent with retrospective effect. As the contractor was warranting that building had been properly built in the deed the leaseholder or its successors or assigns could sue upon that fresh promise and had no need for any retrospective term in order to be provided with the appropriate remedy. The warranty holder could sue on the promise without having to consider the months between practical completion and the signing of the warranty. The officious bystander would not say that retrospective effect was necessary and should therefore be implied into the contract.
32. The authorities of Trolloppe & Colls Limited v Atomic Power Contractors Limited [1963] 1 WLR 333 and Westminster v Clifford Culpin & Partners [1987] 12 Con LR 117 establish that there either must be a prior existing relationship between the parties which makes the implication of a retrospective term necessary or if there is no such pre-existing relationship, only express terms in clear words will give retrospective effect. Where a pre-existing relationship did exist that relationship must be given force from the date it actually existed not merely from the date that the deed was made. In such situations proper account is taken of the fact that there has simply been a delayed contract. Thus where there is no pre-existing relationship it will rarely be commercially necessary for retrospectivity to be implied.
33. On the facts of this case it was not commercially necessary for there to be a retrospective term as the deed on the date when it was signed provided the warranty holder with an appropriate and full remedy. There was no basis for finding, as the judge had found, that there was here a pre-existing relationship because the original leaseholders could have compelled the contractor to give the warranty under the building contract. The judge was wrong to hold that that entitlement arose by virtue of section 56 of the Law of Property Act 1925 as rights under a building contract are not an interest in land or sufficiently connected with land for real property principles to apply. Kijowski v New Capital Properties Limited [1987] 15 Con LR 1. Section 56 had no application and there was no basis under Beswick & Beswick [1968] AC 58 for allowing a third party to enforce the contract as none of the exceptions applied. Chitty 19-107.
34. There was no connection between the contractor and the leaseholder. The leaseholder would have no previous knowledge of the development but would read the building contract as a newcomer. Clause 5 must be read from this, the leaseholder's point of view not from that of the developer or contractor. There was therefore no proper basis for asserting that a successor many years later who was not part of any original contract would have knowledge of the dates of practical completion.
35. The deed of warranty hence came into force when the leaseholder first had rights under it namely on the date it was signed in January 1990. There would be no purpose in the leaseholder being able to sue on breaches before the deed came into effect as the deed provided a full remedy by virtue of the fresh promise by the contractor that the building had been properly constructed. The Respondent's contention that on the Appellant's argument clause 5 had no purpose was incorrect. It ensured that there was no responsibility before practical completion and excluded the possibility that a purchaser could sue in respect of serious delay or unremedied defects before practical completion.

The Respondent's submissions.

36. Clause 5 is clear. It is intended to fix the date on which the deed comes into effect. It identifies the calendar date which is certain and ascertainable by any party including later assignees.
37. The deed as a whole and in particular clause 2 makes it plain that the factual matrix of the deed includes the building contract. The purpose of clause 5 is to enable the leaseholder or subsequent assignee or successor to step into the shoes of the employer under the building contract. It avoids any question of whether the assignee or developer had suffered damage as a result of any breach between practical completion and the date of warranty. Questions could otherwise be raised as to which party had suffered a loss in such circumstances. Such problems had been avoided by the presence of clause 5 whereas on the Appellant's submissions, clause 5 had no real meaning. The deed is intended to give to the leaseholder assignees and successors the same rights against the contractor as the developer had.
38. The submission made by the Appellants that the deed is simply like a TV warranty is incorrect. The Deed of Warranty in this case defines the obligations of John Laing Construction Limited by reference to its obligations under the building contract. This is specifically identified in the recitals and in the First Schedule to the Deed of Warranty and more particularly in clause 2. It follows therefore that any comparison with a TV warranty is inappropriate.
39. A deed is capable of having retrospective effect if that is the express or implied intention of the parties. Here, the wording of the Deed of Warranty under seal is clear. The limitation period is twelve years from the day after the date of the Certificate of Practical Completion. This was chosen rather than a specified date because more than one building was being constructed, each with its own different completion date and hence with its own separate warranty. It was not therefore possible to have one fixed date.
40. If, contrary to the Respondent's primary submission, the wording of the deed and clause 5 were not sufficiently clear to show the express intention of the parties as to the date of the commencement of the deed, a term to such effect should be implied. The references to the building contract within the Deed of Warranty made it clear that it was relevant to ascertaining the purpose of the warranty and its intent. It was not in any sense an unnecessary complication to refer to the building contract. It was central to the interpretation of the Deed of Warranty. It was the building contract which obliged the contractor to give the warranty. Clause 45.1.3 of the building contract required the contractor to enter into the warranty under seal. It also explained clause 5 by stating:-

"The Contractor will not in any such Warranty be required to give any greater undertaking than that contained in this Contract".

41. This clearly indicated the extent of the contractor's obligations and explained why the Deed of Warranty was drafted as it was. It makes it entirely clear that the purpose was to give the leaseholder, its successors and assignees the same rights against the contractor as the developer had.
42. There is no basis for the Appellant's contention that there has to be a pre-existing relationship between the parties. The authorities do not support such a proposition. In the cases of Trolloppe and Westminster there was no pre-existing legal relationship though there was a working relationship which was deemed to have been in place from the date when it had in practice started rather than when the contract relating to it was drafted. In Tameside MBC v Barlow Securities [2001] 75 Con LR 112 the Court of Appeal held that a contract under seal had retrospective effect. Lord Justice Henry said at paragraph 42 page 183:-

"The work was done in pursuance of an agreement under seal, which was intended to and did operate retrospectively; therefore any breaches of contract should be regarded as occurring at the date of the breach, rather than time starting to run only on execution of the deed (See Megaw LJ in Westminster City Council v Clifford Culpin & Partners [1986] 12 Con LR 117 at 138-139)."

43. On the facts of the present case it was the implied intention of the parties if not expressed, that clause 5 should have a retrospective effect. Such an implication is necessary when the factual matrix in particular the building contract is considered. It gives business efficacy to the contract.
44. In any event there was a pre-existing commercial relationship between the parties. The lease was executed on 23 May 1989 after practical completion of the building and prior to the execution of the deed. As from that date, Stockley Academy Limited as an Entitled Party, could enforce the benefit of the agreement by the contractor to enter into a Deed of Warranty under section 56 of the Law of Property Act 1925. Even if that was incorrect there was a pre-existing commercial relationship between the contractor and Northern & Shell as successor to Stockley Academy Limited on the basis of the contractor's undertaking in clause 45.
45. Clause 5 is not a time bar but fixed as a date upon which the deed becomes effective. It therefore only operates as a limitation clause on a particular set of facts. In any event its wording is entirely clear and provides certainty to both parties.

Conclusions.

46. Clause 5 of the Deed of Warranty is not a limitation clause as such, but determines when the deed comes into effect. Where however, on a particular set of facts, as here, a clause may operate as a time bar it must be clear and unambiguous. See The Pera [1985] 2 Lloyds Law Reports 103 and Atlantic Shipping & Trading Co v Louis Dreyfus [1922] 2 AC 250. Clause 5 in my judgment satisfies this requirement. It provides an ascertainable and certain date on which the deed comes into effect. The date, namely the day following the date of issue of the Certificate of Practical Completion is readily identifiable by reference to the relevant documentation and I see no reason why a later assignee or successor should have any difficulty in finding out the relevant date. The date is a matter of record and the fact that a later assignee or successor may be a newcomer does not prevent the relevant information being obtained. Any successor or assignee would be put on notice when reading the Deed of Warranty that the date of issue of the Certificate of Practical Completion had to be discovered.
47. There is no ambiguity in the clause which needs to be construed against the party seeking to rely upon it. The parties' intentions are plain from the face of the document. It was, as the judge found, and both parties agree, the intention of John Laing Construction Limited and Stockley Academy Limited to sign the deed before the date of practical completion so that the deed was intended to come into effect in the future. The Appellants submit that clause 5 was not drafted to deal with the situation which occurred, that is, the signing of the deed after practical completion. As it was not amended to deal with the new situation it no longer had any meaning and was of no real effect. But the fact that clause 5 was not amended when the deed was signed after practical completion is consistent with it being the intention of the parties that the date when the deed was to come into effect remained the same. The fact that this date was after the signing of the deed rather than before makes no difference to the operation of clause 5 unless it could be reasonably inferred that clause 5 had been left unamended in the contract in error. There is however no basis for such a contention.
48. The Appellants alternative submission, that clause 5 can if necessary be given a meaning, namely that it serves the limited purpose of ruling out any breaches which both pre-dated and were cured by the date of practical completion, is not in my judgment persuasive. The wording of clause 5 is not apt to cover either the prevention of claims for delay or unremedied items of defective work before practical completion by the original leaseholder or its successors or assigns. His Honour Judge Thornton rejected the contention before him that the words in clause 5 were there solely to fix the date on which the state of the works was to be considered in deciding whether or not John Laing Construction Limited's warranties had been broken. He noted that Carter v White was authority for the proposition that a collateral obligation such as a warranty or a guarantee may take effect after and run for a longer period than the underlying obligation it supported. Nevertheless he rejected those submissions and said:-

"The parties to the warranty deed clearly intended that the warranties it provided would take effect in their entirety at the same time as any relevant underlying event occurred and any consequent breach of the building contract took effect in the underlying building contract, since these parties envisage that the warranty deed would be entered into before practical completion and would then take effect at practical completion under that contract."

49. They neither intended nor created a dissonance between the warranty deed and the underlying obligation. I agree with the judge's conclusion on this issue. Clause 5 of the deed does not bear the complicated meaning contended for by the Appellants.
50. The purpose of clause 5 seems to me to be as the Respondents submit. It enables the leaseholder or subsequent assignee or successor to step into the shoes of the employer under the building contract. This avoids any conflict between the assignee and developer as to who might have suffered damage as a result of any breach between practical completion and the date of warranty thus avoiding any issue as to which party had suffered the loss in such circumstances. Furthermore if clause 5 has a retrospective effect it provides certainty for both the contractor and the warranty holder. The contractor obtains the certainty of a normal limitation period running from the date of the Certificate of Practical Completion in relation to all those who might claim against him and the warranty holder has the certainty of being able to sue in respect of breaches from practical completion, irrespective of the later date of the contract or any privity of contract argument. Both contractor and warranty holder obtain certainty.
51. Whether or not a clause in a contract is capable of having a retrospective effect, depends upon the express or implied intention of the parties. Trolloppe & Colls Limited, The Atomic Power Constructions Limited [1963] 1 WLR at 340, 341. In relation to the implication of such a term Mr Justice Megaw, as he then was, said:-

"Terms can only be implied where, to use the common phrase, they are necessary in order to give 'business efficacy' to the contract…… On the other hand I do not think that a term such as this can be implied for the purpose of upholding the existence of a contract, unless it can clearly be seen that it conforms with what the parties truly intended and with what they both would have accepted as a matter of course had the question been raised in the course of negotiations or at the making of the supposed contract."

52. In City of Westminster v Clifford Culpin & Partners 12 Con LR 117, 139 Sir John Megaw again made it clear that where parties plainly intended a deed to have retrospective effect full effect should be given to that common intention even though it was not expressed in words.
53. Mr Robert Clay on behalf of the Appellants had submitted before His Honour Judge Thornton in this case, and in his skeleton before this Court that a clause having retrospective effect could only be incorporated if a prior existing relationship made implication necessary, or, where there was no such pre-existing relationship an express term in clear words gave such retrospective effect. In presenting his argument to this Court however Mr Clay accepted that a pre-existing relationship did not have to exist as a matter of law but submitted that if it did not, a good commercial reason had to be found before the contract could be backdated. It was correctly conceded that a pre-existing relationship is not an essential prerequisite to a finding of retrospectivity.
54. When the factual matrix of this contract is considered it is clear that the intention of the parties was to give clause 5 retrospective effect. The deed is not a simple warranty such as that provided by the manufacturer to a purchaser in the sale of a television. The deed specifically refers to the building contract and its past and future performance by the contractor. Far from being an unnecessary complication it is an integral part of the contract between the contractor and the original leaseholder and its successors or assigns.
55. Clause 45.1.3 of the building contract requires the contractor to enter into warranties under seal in the form reasonably required by any Entitled Party such as the original leaseholder, it successors or assigns. It is expressly stated in clause 45.1.3 that the contractor will not in any such warranty be required to give any greater undertaking than that contained in the contract. This clause in the building contract therefore explains why the Deed of Warranty was drafted as it was, and also makes clear the intentions of the contractor and the developer when the building contract was signed. There is no reason why this intention should be altered by the date of the signing of the deed of Warranty. Nor is there any reason why the leaseholder should have an intention different to that of the contractor. As already pointed out in this judgment the original leaseholder, its successors and assigns is provided with greater clarity if the Deed of Warranty has the same period of limitation as the underlying obligation. An independent observer would regard this interpretation as giving business efficacy to the contract.
56. The fact that a fresh promise is provided in the Deed of Warranty by virtue of the contractor covenanting and undertaking as set out in clause 2 is not inconsistent with clause 5 having retrospective effect. It is inherent in the drafting of such a Deed of Warranty.
57. It is not necessary on the basis of these findings to determine whether or not the original leaseholder's rights under the building contract and Deed of Warranty amounted to an interest in land or was sufficiently connected with the land for real property principles to apply. I have already found that the nature of the relationship between the contractor and the original leaseholder and between the Deed of Warranty and the building contract were such as to make it commercially necessary for the warranties provided by the contractor to be no greater than its undertakings under the building contract.
58. I conclude that clause 5 was clear and unambiguous. It was the express intention of the parties to make the deed come into effect on an ascertainable and certain day, namely the day following the date of the issue of the Certificate of Practical Completion. Even if the words of clause 5 did not express an intention that it should have retrospective effect, the factual matrix of the deed, and in particular clause 45.1.3 of the building contract make it clear that it was the parties common intention that clause 5 should operate retrospectively. As Sir John Megaw said in City of Westminster v Clifford Culpin, the parties plainly so intended.
59. Accordingly I would dismiss the appeal.
60. LADY JUSTICE HALE: I agree
61. LORD JUSTICE JUDGE: I also agree