Liberty Mercian Ltd v Cuddy Civil Engineering Ltd & Anor

Liberty Mercian Ltd v Cuddy Civil Engineering Ltd & Anor

Where a contractual obligation to provide a performance bond cannot be performed due to impossibility, the court may order substituted performance by payment into court of an equivalent sum, provided this gives the claimant equivalent rights. Specific performance of warranties may be ordered even where the warrantor is insolvent and dissolved, if there is evidence that the warranty would be backed by insurance and the proceedings would not be difficult or uncertain. Costs are to be allocated to reflect the parties’ relative success and failure at different stages of the proceedings.

Parties
Claimant: Liberty Mercian Limited; Defendant: Cuddy Civil Engineering Limited; Defendant: Cuddy Demolition and Dismantling Limited
Jurisdiction
England and Wales
Judgment Date
30 October 2014
Procedural Posture
Civil (technology and Construction Court) / Judgment After Trial and Further Hearings on Specific Performance and Costs
Outcome
Specific performance granted in part; substituted performance ordered; costs apportioned.
Legal Topics
Specific Performance, Performance Bonds, Collateral Warranties, Costs Orders, Substituted Performance
Contract Law Civil Procedure Specific Performance Performance Bonds Collateral Warranties Costs Orders Substituted Performance

Case Brief

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Parties

Liberty Mercian Limited

Claimant

Cuddy Civil Engineering Limited

Defendant

Cuddy Demolition and Dismantling Limited

Defendant

Procedural Posture

Civil (technology and Construction Court) / Judgment After Trial and Further Hearings on Specific Performance and Costs

Legal Issues

  1. 1 Whether specific performance should be ordered for provision of a performance bond and collateral warranties under the contract
  2. 2 Whether substituted performance by payment into court is appropriate where provision of a bond is impossible
  3. 3 Whether specific performance should be ordered for warranties from an insolvent and dissolved company

Ratio Decidendi

Where a contractual obligation to provide a performance bond cannot be performed due to impossibility, the court may order substituted performance by payment into court of an equivalent sum, provided this gives the claimant equivalent rights. Specific performance of warranties may be ordered even where the warrantor is insolvent and dissolved, if there is evidence that the warranty would be backed by insurance and the proceedings would not be difficult or uncertain. Costs are to be allocated to reflect the parties’ relative success and failure at different stages of the proceedings.

Court Disposition

Specific performance granted in part; substituted performance ordered; costs apportioned.

Orders

  • CCEL to pay £420,000 into court as substituted performance for the performance bond.
  • Order for specific performance in relation to the warranties to be provided by Quantum.