Getting the contract parties wrong – Court refuses to help

Liberty Mercian Limited v Cuddy Civil Engineering Limited [2014] BLR179, TCC, Ramsey J

Liberty Mercian (LM) was a developer seeking to carry out extensive preparatory works before building a supermarket.  LM issued a letter of intent to “the Cuddy Group“.  LM’s advisers drew up the contract documents on the basis that £4,200,000 would be paid to the Cuddy Group to carry out the civil engineering works.  LM’s advisers then realised that there was no such entity as “the Cuddy Group“, there was only an association of companies owned by the same shareholders.

Several months later it was realised that (a) CCEL was not performing and (b) CCEL had no assets.  The work was being done by its “sister company” Cuddy Demolition and Dismantling Limited.  Liberty Mercian went to court for a declaration that the real contracting party was actually Cuddy Demolition and Dismantling Limited.

Held:

The contract was claimed plain on its face, there had been no mistake or misrepresentation.  Liberty Mercian had made a bad bargain and must take the consequences.

Comment

This case demonstrates graphically a recurring problem where contracting parties do not make the most rigorous checks as to company identities (including checking registered numbers, since these cannot be changed).  The court had no sympathy with any of the Claimant’s ingenious arguments.  Further the contract contained a clause requiring the granting of “a parent company guarantee” without saying who the parent company was and the court further refused to grant specific performance of this undertaking.

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