Cuddy Civil Engineering Limited 1st Defendant -and- Cuddy Demolition and Dismantling Limited 2nd Defendant
When entering into a construction contract or appointment it is very important that the parties are correctly identified. This should be done by using the correct name and where relevant, the company name and registered office. Extra care should also be taken where the organisation uses a trade name or initials which it is commonly used or known by rather than the actual legal name. There are rules which govern how registered companies should identify themselves in any correspondence.
The case of Liberty Merician Limited v Cuddy Civil Engineering Limited and Cuddy Demolition and Dismantling Limited is an example of the consequences of not identifying the correct contracting party. In this case, the High Court refused to replace the name of one registered company with another registered company. The judge considered the doctrine of misnomer (broadly, the substitution of the correct term/name in place of an inaccurate one) and also considered whether their doctrine of a unilateral or joint mistake could have been applied.
The Claimant, Liberty Mercian Ltd (‘Liberty’) were procuring the construction of a new supermarket and following a successful tender, the contractor was named as the ‘Cuddy Group’.
It seems that most of the correspondence was with the ‘Cuddy Group’ and this included a letter of intent addressed to the ‘Cuddy Group’. When drafting the building contract, Liberty’s legal representative carried out a Companies House check and incorrectly identified Cuddy Civil Engineering Limited (‘CCEL’) as the correct company of the ‘Cuddy Group’. Liberty’s legal representative then asserted that CCEL should be named throughout as the contractor. The representatives for Cuddy Group agreed and the references to Cuddy Group were changed to CCEL – even though CCEL was a dormant company.
Unfortunately for Liberty, Cuddy Group is in fact the trading name for Cuddy Demolition Dismantling Limited (‘CDDL’).
Once the error had come to light, Liberty sought a declaration that references to CCEL was a misnomer for CDDL, the correct contracting party.
The judge accepted that Liberty had made a mistake, but identified that the mistake was internal to Liberty, the representatives of the Cuddy Group only accepted the name change because they were keen to enter the contract.
The judge held the correct test to decide if the misnomer should be corrected is set out in the case of Chartbrook v Persimmon Homes in which Lord Hoffman stated:
“Two conditions must be satisfied: first, there must be a clear mistake on the face of the instrument; secondly, it must be clear what correction ought to be made to cure the mistake. If those conditions are satisfied, the correction is made as a matter of construction.”
Furthermore, Lord Hoffman stated:
“All that is required is that it should be clear that something has gone wrong with the language and that it should be clear what a reasonable person would have understood the parties to have meant.”
The judge held that there was no misnomer and that Liberty’s mistake could not meet the conditions set out above. Liberty were unable to show that the parties had intended the contractor to be CDDL. Liberty carried out the Companies House checks and satisfied themselves that CCEL were the correct party and insisted that the contract reflected this.
This seems to be a harsh decision for Liberty in that the contractor who actually carried out the works was, as a matter of fact, CDDL. This also had consequences with the collateral warranties which had been provided to the supermarket.
However, from CCEL’s perspective this is also a difficult situation. The directors of CCEL have entered into a contract under which it is contractually obliged to comply with.
This case sets out the threshold a party will have to surpass in order to persuade the Court that there was a clear mistake in the document. It is key that when setting up a contract you should always ensure that you are confident that the parties’ names are those you intended to be contractually bound to. The Courts do not take a sympathetic approach towards the misidentifying party.