Derek Hodd Ltd v Climate Change Capital Ltd

A contractual misnomer is ordinarily resolved by construing the agreement objectively in its factual background. No special rules apply merely because the mistake concerns the identity of a contracting party. If construction cannot identify a party, the agreement may fail for uncertainty unless rectified. Rectification depends on a continuing common intention, an outward expression of accord, continuation of that intention when the instrument was executed, and a mistake causing the instrument not to reflect it.

A contingency fee is payable only where the contractual reporting and success criteria are satisfied and the client fails to implement the relevant recommendations. Illustrative savings estimates and preliminary discussion do not suffice.

The claimant, as assignee of Zukra Ltd’s contractual rights, sought a contingency fee for expense-reduction consultancy supplied to the defendant’s corporate group. The engagement letter named non-existent companies on both sides of the transaction. The court had to determine which group company contracted with Zukra, whether the Business Names Act 1985 affected enforceability, and whether a travel-cost report triggered the agreed contingency fee.

The defendant accepted that a contract had been concluded but disputed the identity of the contracting companies and contended that the report failed to satisfy the contractual requirements for payment.

1. Identity of the defendant. The agreement was objectively construed as a contract with CCC, the group’s chief operating company. The internal fact that Holdings employed staff and paid most expenses had not been communicated to the claimant’s assignor and did not form part of the relevant factual matrix. The court rejected the contention that the contract was void because no group company had been identified.
2. Misnomer and rectification. A misnomer is a matter of construction, and no special rules apply merely because two possible entities exist. The court preferred the approach in Nittan (UK) Limited v Solent Steel Fabrication Limited [1981] 1 Lloyd’s Rep. 633 and distinguished Davies v Elsby Brother Limited [1961] 1 WLR 170. Alternatively, the agreement would have been rectified. The objective common intention was that CCC should be the contracting party, there was an outward expression of accord, that intention continued at execution, and the written instrument failed to reflect it.
3. Identity of the claimant’s contracting entity. The other contracting party was Zukra, rather than ERA (UK) or Mr Hollywood personally, because Zukra held the ERA franchise and was the corporate vehicle through which he carried on business.
4. Business Names Act 1985. Zukra complied with section 4(1)(a)(iii) and (iv). Its corporate name and address appeared in legible characters on the reverse of the engagement letter, which incorporated the terms and conditions. The statutory objection therefore failed. The court added that, even if breach and loss had been established, it would have permitted the proceedings to continue.
5. Contingency fee. The travel Findings Report was not a Recommendation Report under the agreement. The Benchmark Report lacked an intelligible air-travel benchmark and success criteria. The scenarios were insufficiently supported, several failed to preserve equivalent service quality, and the report did not meet the minimum 5 per cent saving requirement. Since there were no clear cost-saving recommendations, non-implementation could not arise.
6. The contractual claim, quantum meruit claim and unjust-enrichment claim were dismissed. The claimant had chosen not to pursue payment at the contractual day rate.