Rectification: quality of evidence of the common mistake

In Ahmad v Secret Garden (Cheshire) Ltd ([2013] EWCA Civ 1005, CA (Eng)) A and S negotiated the terms of a lease. They signed a document (lease 1) that did not contain all of the terms but did record some of the agreed terms. This allowed S to sub-let. They then signed a lease that did not allow S to sublet (lease 2). A assured S that the terms of lease 1 were valid and binding.  A sought possession on the grounds of unlawful sub-letting. Whether he could succeed depended on whether lease 2 could be rectified to include the terms agreed in lease 1. The Manchester County Court ordered rectification and A’s appeal against this failed.

On the question of the quality of evidence of a common mistake that is required, Arden LJ said:

‘The evidence must meet the requirement for the outward expression of accord. This stems from the law’s concern that parties should not be able to disassociate themselves from their agreement simply because it has become commercially undesirable. They have to show clear evidence of a consensus on some issue which the executed and unrectified agreement does not reflect. The agreement has to be objectively ascertained by reference to what they both did and said, and not to what each of them may privately have thought.’ ([43]).

The decision to execute a second agreement not containing the terms of lease 1 was not decisive in this case. This was not a case where the parties had made a conscious decision to keep some of the agreed terms in a separate document ([52] – [53]).

Michael Lower

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