I. Introduction

= equitable remedy. Court corrects text of a written contract by inserting/changing words that have been omitted or included by mistake

1. Mistake in recording the terms in the document

/#from making
Frederick E Rose (London) Ltd v William H Pim Jnr & Co Ltd [1953] -> # erroneous assumption ⚠

(b) Analysis of test

• (i) Common continuing intention is enough
  Joscelyne v Nissen [1970] ⚠
• (ii) How to establish common continuing intention
  Britoil plc v Hunt Overseas Oil Inc [1994] heads of agreement ❌
  Objective approach but subjective states of mind not irrelevant

(a) The position in Chartbrook

• (i) Lord Hoffmann’s obiter comments in Chartbrook
  
  • ❓ what would an objective observer have understood the intention of the parties to be
• (ii) Application to the facts of Chartbrook ...
• (iii) Criticism of Chartbrook
  
  • Daventry District Council v Daventry & District Housing Ltd [2011] 🚩
    Objectively construed, the non¬binding agreement meant x (A position) but the written contract means y (B). = A is right.

(b) The position in Daventry

• Rectification ordered
• No shared mistaken belief as to the legal effect of the written contract, there was a shared mistaken belief (albeit for opposite reasons) that the written contract gave effect to the prior agreement
• Based on correct approach of Hoffmann in Chartbrook (# views as to the desirability of that approach)

(a) Advantages

• T Etherton (2015) 📕
• (1) Avoids problems of proof
• (2) Court has more power to rectify contracts so as to avoid injustice
• (3) Consistent with the approach to interpretation of contract

(b) Disadvantages

• (1) Artificial results, e.g., in Chartbrook
• (2) More intrusive
• (3) Blurs line between common and unilateral mistakes
• (4) Undermines the role of equity
• P Davies (2016) 📕 -> what if common subjective intention not in the doc? equitable rectif as a safety valve?

(a) Is the approach in Chartbrook correct?

Principle

Leggatt LJ = 2 formes of rectification (2 principles)

• (1) Rectification of a document because it does not reflect the terms of a prior concluded agreement (agreements must be kept, contractually agreed to record -> terms of prior contract objectively determined)
• (2) Rectification where no prior doc to rectify, but had a common continuing intention in respect of a particular matter which was not reflected in the document
  
  • an equitable principle of good faith -> parties’ subjective states of mind
    

    Precedent

• The Chartbrook approach was inconsistent with precedent
  
  • Hoffmann in it = obiter. Daventry based on Chartbrook correct but Daventry no binding on CA
    

    Policy considerations

• Certainty = primacy to the final written terms
• Objective approach can lead to unfairness
  

(b) What is the current approach?

• (1) A prior concluded contract, in which case the terms of the prior contract must be objectively determined; or
• (2) A common continuing intention shared by the parties, in which case the existence of the intention must be established as a subjective state of mind, and it must also be shown that, as a result of communication between them, the parties understood each other to share that intention.
  

2. Basis of intervention

D’s unconscionable acquiescence in C’s mistake.
FSHC Group Holdings Ltd v GLAS Trust Corp [2019] -> extension of the equitable principle of common mistake rectif (no prior ct) (// contrary to GF)

1. Effect of changes within rectification

See above for the argument that the objective approach in Chartbrook undermined the role of the equitable doctrine of rectification.

(a) Why does it matter?

Date of meaning. Rectif = date of court's order, new. Interpretation = always had the meaning
Third parties. Rectif may be refused to protect 3rd parties in GF, interpretation does not care

(b) Current scope of rectification

Rectification is particularly significant where pre-contractual negotiations play a role. Such negotiations can be taken into account when rectifying a contract, but not when interpreting it.

(c) Future scope

• Case for extension
  R Buxton (2010) 📕
• Lord Sumption vs Lord Hoffmann again
  Sumption (2017) -> no need for rectif if you can find an intention
  Hoffman (2018) -> construction is anterior to rectif. Sometimes, cannot amount to interpretation, rectif only remedy

1. Test

• Rectification may be ordered if one party:
  (i) is aware that the other party is mistaken about the content or meaning of the written terms in the contract, and
  (ii) unconscionably fails to point this out.
• Awarness covers:
  (1) D has actual knowledge; or
  (2) D is wilfully blind to an obvious fact; or
  (3) D wilfully or recklessly fails, contrary to the notion of reasonableness and honesty, to inquire whether there has in fact been a mistake.
• Commission for New Towns v Cooper (1995) ⚠
• George Wimpey UK Ltd v VI Components Ltd [2005] 🚩