Liberty Mercian Ltd v Cuddy Civil Engineering Ltd
Citation: EWHC 2688 (TCC)
Nature of case:
Liberty Mercian had entered into an amended NEC3 form of contract for the construction of a retail plateau. A tender form for the works had named “Cuddy Group” as the contractor, this being a trading name of Cuddy Demolition and Dismantling Limited (“CDDL”). Liberty sent “Cuddy Group” a letter of intent and CDDL began work on the site. Liberty’s solicitors conducted an internet search for “Cuddy Group” and found Cuddy Civil Engineering Limited (“CCEL”), a dormant company with the same shareholders as CDDL and common directors. A warranty was executed naming CCEL as the contractor, with CCEL also named as the contractor on the eventually executed NEC3 contract. CDDL continued to work on the site, and payments were made into CDDL’s bank account.
Problems subsequently arose on the project, and Liberty purported to terminate the contract for failure to remedy defects. CCEL accepted that termination as a repudiatory breach. Liberty commenced proceedings against CCEL, seeking a declaration that CCEL remained obliged to deliver a parent company guarantee, performance bond and deeds of warranty. Liberty subsequently contended that there had been a mistake as to the identity of the contractor, and that the contracting party, whether that was CCEL or CDDL, was obliged to deliver the guarantee, bond and deeds of warranty.
Ramsey J found that there had been no misnomer and no mistake, either mutual or unilateral, for which rectification could be available. Nor was there sufficient evidence to indicate that there was a convention that, although the named contractor was CCEL, the contract was entered into by the party carrying out the works, CDDL. Therefore, the question was whether CCEL was obliged to deliver the guarantee, bond and deeds of warranty. Ramsey J ruled that these obligations were merely procedural and ancillary, and survived termination or repudiation of the contact. On the facts, while CCEL was in breach of its obligation to provide the bond and deeds of warranty, CDDL could not be considered to be CCEL’s parent company, and so there was no obligation to provide a parent company guarantee.