Specific performance and substituted performance

In Liberty Mercian Ltd v Cuddy Civil Engineering Ltd [2014] EWHC 3584 (TCC) Ramsey J heard another instalment in the on-going litigation between the parties. He held that the claimant was entitled to a specific performance order in relation to the defendant’s obligation to provide collateral warranties notwithstanding the fact that the company obliged to provide the warranties was insolvent. But the evidence suggested that the company was insured and on that basis it was appropriate to make a specific performance order. In relation to the obligation to provide a performance bond, it was held that it was impossible for the defendant to provide the performance bond it had contracted to provide. But, drawing upon the flexibility of the court’s equitable jurisdiction, he held that the court could make an order for specific performance by way of substituted performance. On the facts this substituted performance took the form of the payment into court of a sum equivalent to that which should have been provided under the performance bond.