Liberty v Cuddy (3): Is The Court Acting As A Bondsman?

Summary and implications

In the recent decision of Liberty Mercian Limited v Cuddy Civil Engineering Limited [2014] EWHC 3854 (TCC) the Technology and Construction Court (the Court) considered a payment of funds into court as an alternative remedy to specific performance to deliver security documentation.

Liberty Mercian Limited (Liberty) entered into a contract with Cuddy Civil Engineering Limited (CCEL) for works relating to the construction of a new retail plateau which was later terminated.

In fact, CCEL is a dormant company and its group company, Cuddy Demolition and Dismantling Limited (CDDL), was the company carrying out the works.

On termination of the contract, Liberty alleged that CDDL ought to have been the contracting party and in any event, either CDDL or CCEL were in breach of the contract by failing to provide a parent company guarantee, performance bond and collateral warranties from a consultant in its favour, as required under the contract.

Liberty sought:

declaratory relief and/or rectification with regard to the correct contractor contracting party; and specific performance and/or damages with respect to the non-provision of security documents. First decision [2013] EWHC 2688 (TCC)

The Court decided that whilst the contracting party, CCEL, was a dormant company there was no common mistake, misnomer or unilateral mistake in respect of the contracting party and, further, there was no reason why the Court should rectify the contract and make CDDL the contracting party.

The Court further held that CCEL was in breach of contract by failing to provide the parent company guarantee, performance bond and warranties, and this obligation survived the termination of the contract.

In considering the issue of specific performance and/or damages, the Court noted that CCEL and CDDL did not have a parent-child corporate relationship and, in fact, CCEL did not have a parent company. Therefore, the Court was reluctant to order specific performance of an obligation that would prove impossible to perform.

On that basis, the Court invited further evidence and submissions from both parties before it decided what remedies were available to Liberty.

Second decision [2013] EWHC 4110

The Court did not consider how the fact that CCEL did not have a parent company affected its obligation to provide a parent company guarantee. However, it held that damages were not an adequate remedy for the non-provision of the other security documentation.


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