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RECTIFICATION VERSUS INTERPRETATION: THE NATURE AND SCOPE OF THE EQUITABLE JURISDICTION

Published online by Cambridge University Press:  14 March 2016

Paul S. Davies
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Abstract

This article argues that mistakes in written contracts should be corrected under the equitable doctrine of rectification rather than the common law of interpretation. But rectification on the basis of a common mistake should only be granted where both parties are actually mistaken. Any other approach is inconsistent with the nature of the equitable jurisdiction, and blurs the boundary between common mistake and unilateral mistake rectification.

Keywords

contractinterpretationrectificationmistakeequity
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Articles
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The Cambridge Law Journal , Volume 75 , Issue 1 , March 2016 , pp. 62 - 85
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Copyright © Cambridge Law Journal and Contributors 2016 

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References

1 Chartbrook Ltd. v Persimmon Homes Ltd. [2009] UKHL 38; [2009] 1 A.C. 1101.

2 R. Buxton, “‘Construction’ and Rectification after Chartbrook” [2010] C.L.J. 253, 261.

3 Daventry District Council v Daventry & District Housing Ltd. [2011] EWCA Civ 1153; [2012] 1 W.L.R. 1333. Professor McLauchlan has called it “one of the hardest contract cases I have read”: D. McLauchlan, “Refining Rectification” (2014) 130 L.Q.R. 83, 96.

4 R. Calnan, Principles of Contractual Interpretation (Oxford 2013), 145: “The result [of Chartbrook] is that the law is in a state of flux. The extent to which the approach in Chartbrook will be followed is still not entirely clear in England, and whether it will followed at all in jurisdictions such as Australia and New Zealand has yet to be decided.”

5 See e.g. Crossco No.4 Unlimited v Jolan Ltd. [2011] EWHC 803 (Ch), at [253], per Morgan J.; Tartsinis v Navona Management Co. [2015] EWHC 57 (Comm), at [90]–[99], per Leggatt J.

6 See e.g. Buxton, “‘Construction’ and Rectification after Chartbrook”; K. Lewison, “If It Ain't Broke, Don't Fix It” in First Supplement (2010) to K. Lewison, The Interpretation of Contracts 4th ed. (London 2009), 127; Lord Toulson, “Does Rectification Require Rectifying?” (TECBAR Annual Lecture, 31 October 2013), available at <https://www.supremecourt.uk/docs/speech-131031.pdf>; N. Patten, “Does the Law Need to Be Rectified? Chartbrook Revisited” (The Chancery Bar Association 2013 Annual Lecture, 29 April 2013), available at <www.chba.org.uk/for-members/library/annual-lectures/does-the-law-need-to-be-rectified-chartbrook-revisited>; P. Morgan, “Rectification: Is It Broken? Common Mistake after Daventry” [2013] R.L.R. 1; G. Legatt, “Making Sense of Contracts: The Rational Choice Theory” (2015) 131 L.Q.R. 454, 464; T. Etherton, “Contract Formation and the Fog of Rectification” (2015) CLP (early view: <http://clp.oxfordjournals.org/content/early/2015/07/08/clp.cuv007.full>). See also C. Nugee, “Rectification after Chartbrook v Persimmon: Where Are We Now?” (2012) 26 T.L.I. 76; Lord Neuberger, “Reflections on the ICLR Top Fifteen Cases: A Talk to Commemorate the ICLR's 150th Anniversary” (6 October 2015), at para. 42, available at <https://www.supremecourt.uk/docs/speech-151006.pdf>.

7 Investors Compensation Scheme Ltd. v West Bromwich Building Society [1998] 1 W.L.R. 896, 912–13 (hereafter “ICS”).

8 E.g. Buxton “‘Construction’ and Rectification after Chartbrook”, pp. 257–58.

9 Chartbrook Ltd. [2009] UKHL 38; [2009] 1 A.C. 1101, at [25].

10 A. Burrows, “Construction and Rectification” in A. Burrows and E. Peel (eds.), Contract Terms (Oxford 2007).

11 As Lord Neuberger has observed, “The increased volume, size and complexity of legal documents has compounded the inherent risk of error, and the accessibility of the negotiating material has assisted, even enabled, parties to argue about the effect of their pre-contractual communications to an extent which was simply inconceivable twenty years ago”: “Foreword” to D. Hodge, Rectification: The Modern Law and Practice Governing Claims for Rectification for Mistake (London 2010), vii.

12 Calnan, Principles of Contractual Interpretation, p. 100. See also Campbell v Daejan Properties Ltd. [2012] EWCA Civ 1503; [2013] H.L.R. 6, per Jackson L.J.: “In construing a written contract, the governing principle is that the parties mean what they say. The court must give effect to the express terms of the contract and must resist the temptation to re-draft or improve upon those terms. If by mischance the contract does not say what both parties intended, the normal remedy for the aggrieved party is an action for rectification.”

13 Marley v Rawlings [2014] UKSC 2; [2014] 2 W.L.R. 213, at [40].

14 Cf. G. McMeel, The Construction of Contracts: Interpretation, Implication and Rectification 2nd ed. (Oxford 2011), para. 17.01.

15 The notion of “plain meaning” is admittedly controversial, but seems to be accepted in the commercial context: see e.g. Charter Reinsurance Co. Ltd. v Fagan [1997] A.C. 313, 384; Lloyds TSB Foundation for Scotland v Lloyds Banking Group plc [2013] UKSC 3; [2013] 1 W.L.R. 366; Lehman Brothers International (Europe) v Lehman Brothers Finance SA [2013] EWCA Civ 188 [71]; Arnold v Britton [2015] UKSC 36; [2015] 2 W.L.R. 1593, at [17]–[20]. E. Farnsworth, Contracts, 4th ed. (New York 2004), §7.7. See also R. Lord, Williston on Contracts, 4th ed. (Rochester 1999), §602; cf. L. Solan, The Language of Judges (Chicago 1993), esp. ch. 4. See also A. Corbin, Corbin on Contracts (St. Paul 1960), vol. 3, esp. §535 and §542.

16 See e.g. In the Goods of Peel (1870) L.R. 2 P&D 46; Shore v Wilson (1842) 9 Cl. & Fin. 355, 365, per Tindal C.J. For further consideration of the parole evidence rule, see e.g. R. Stevens, “Objectivity, Mistake and the Parol Evidence Rule” in A. Burrows and E. Peel (eds.), Contract Terms (Oxford 2007).

17 R. (Westminster City Council) v National Asylum Support Service [2002] UKHL 38; [2002] 1 W.L.R. 2956, at [5], per Lord Steyn, cited with approval in Oceanbulk Shipping & Trading SA v TMT Asia Ltd. [2010] UKSC 44; [2011] 1 A.C. 662, at [36], per Lord Clarke.

18 Codelfa Construction Pty Ltd. v State Rail Authority of NSW (1982) 149 C.L.R. 337, 352, per Mason J.

19 Mount Bruce Mining Limited v Wright Prospecting Pty Limited [2015] HCA 37; Western Export Services Inc. v Jireh International Pty Ltd. [2011] HCA 45; (2011) 86 A.L.J.R. 1; Royal Botanic Gardens and Domain Trust v South Sydney City Council [2002] HCA 5; (2002) 240 C.L.R. 45. Neither the decision of the High Court in Electricity Generation Corporation (t/as Verve Energy) v Woodside Energy Ltd. (2014) 306 ALR 25; [2014] HCA 7 nor that of the New South Wales Court of Appeal in Mainteck Services Pty Ltd. v Stein Heurtey SA [2014] NSWCA 184 alters this position such that there has been a decisive departure from the traditional understanding of Codelfa; for critical discussion, see J. Carter, W. Courtney and G. Tohurst, “‘Reasonable Endeavours’ in Contract Construction” (2014) 32 J.C.L. 36.

20 See recently Tartsinis [2015] EWHC 57 (Comm), at [11], per Leggatt J.

21 Rainy Sky SA v Kookmin Bank [2011] UKSC 50; [2011] 1 W.L.R. 2900, at [23]. See also e.g. in Multi-Link Leisure Developments Ltd. v North Lanarkshire Council [2010] UKSC 47; [2011] 1 All E.R. 175, at [11]: “words … should not be changed, taken out or moved … until it has become clear that the language the parties actually used creates an ambiguity which cannot be solved otherwise” (per Lord Hope). See also e.g. Thompson v Goblin Hill Hotels [2011] UKPC 8; [2011] 1 BCLC 587; Al Sanea v Saad Investments Co. Ltd. [2012] EWCA Civ 313, at [31], per Gross L.J.; Ardagh Group SA v Pillar Property Group Ltd. [2013] EWCA Civ 900; [2014] STC 26, at [50], per Etherton C.; Arnold [2015] UKSC 36; [2015] 2 W.L.R. 1593, at [17]–[18].

22 ICS [1998] 1 W.L.R. 896, 904. See also Charter Reinsurance Co. Ltd. [1997] A.C. 313, 388, per Lord Mustill.

23 Ryledar Pty Ltd. v Euphoric Pty Ltd. [2007] NSWCA 65; (2007) 69 N.S.W.L.R. 603, at [108]–[109].

24 E.g. in New Zealand, it has been established that reference to the factual matrix is desirable even when the terms of the contract are not ambiguous: Vector Gas Ltd. v Bay of Plenty Energy Ltd. [2010] NZSC 5; [2010] 2 N.Z.L.R. 444; See also Boat Park Ltd. v Hutchinson [1999] 2 N.Z.L.R. 74, 81–82.

25 Eli Lilly and Co. v Novopharm Ltd. [1998] 2 S.C.R. 129, 161 D.L.R. (4th) 1; G. Hall, “The Curious Incident in the Law of Contract: The Import of 22 Words from the House of Lords” (2004) 40 C.B.L.J 20.

26 Sattva Capital Corporation v Creston Moly Corporation 2014 SCC 53; (2014) 373 D.L.R. (4th) 393.

27 S. Waddams, “Contractual Interpretation” (2015) 130 L.Q.R. 48, 51.

28 The decision of the Supreme Court in this respect was not entirely without precedent: see e.g. Hi-Tech Group Inc. v Sears Canada Inc. (2001) 52 OR (3d) 97 (CA), at [23]; Kingsway General Insurance Co. v Lougheed Enterprises Ltd. 2004 BCCA 421; Dumbrell v Regional Group of Companies 2007 ONCA 59, at [54]; J. McCamus, The Law of Contracts, 2nd ed. (Toronto, Irwin Law, 2012), 751. But compare the earlier decision of the Supreme Court in Eli Lilly and Co. [1998] 2 S.C.R. 129, 161 D.L.R. (4th) 1, at [55]–[56], per Iacobucci J., which is apparently now overruled by Sattva: “… it is unnecessary to consider any extrinsic evidence at all when the document is clear and unambiguous on its face … to interpret a plainly worded document in accordance with the true contractual intent of the parties is not difficult, if it is presumed that the parties intended the legal consequences of their words.”

29 At [57], citing Glaswegian Enterprises Inc. v B.C. Tel Mobility Cellular Inc. (1997) 101 B.C.A.C. 62.

30 Prenn v Simmonds [1971] 1 W.L.R. 1381 (HL); Chartbrook Ltd. [2009] UKHL 38; [2009] 1 A.C. 1101.

31 See the discussion of an example given by Moore-Bick L.J. in Burrows, “Construction and Rectification”, p. 96.

32 See generally McMeel, The Construction of Contracts, ch. 5.

33 Buxton, “‘Construction’ and Rectification after Chartbrook”, p. 261. See also Tartsinis [2015] EWHC 57 (Comm), at [11], per Leggatt J.

34 Calnan, Principles of Contractual Interpretation, p. 66.

35 The parties have considerably less control over the context or purpose ascribed by a subsequent tribunal than they do over the text itself: J. Morgan, Contract Law Minimalism: A Formalist Restatement of Commercial Contract Law (Cambridge 2013), 229.

36 Bell v Cundall (1750) Amb. 101; Garrard v Frankel (1862) 30 Beav. 445; Smith v Jones [1954] 1 W.L.R. 1089; Thames Guaranty Ltd. v Campbell [1985] Q.B. 210.

37 Chartbrook Ltd. [2009] UKHL 38; [2009] 1 A.C. 1101, at [40].

38 J. Spigelman, “From Text to Context: Contemporary Contractual Interpretation” (2007) 81 A.L.J. 322, 334.

39 D. McLauchlan, “Contract Interpretation: What Is It About?” (2009) 31 Sydney L.R. 5, 42–43; J. Carter, The Construction of Commercial Contracts (Oxford 2013), para. 7–42. See also M. Barber and R. Thomas, “Contractual Interpretation, Registered Documents and Third Party Effects” (2014) 77 M.L.R. 597.

40 See e.g. Mannai Investment Co. Ltd. v Eagle Star Life Assurance Co. Ltd. [1997] A.C. 749, 779, per Lord Hoffmann: “There are documents in which the need for certainty is paramount and which admissible background is restricted to avoid the possibility that the same document may have different meanings for different people according to their knowledge of the background.”

41 Chartbrook Ltd. [2009] UKHL 38; [2009] 1 A.C. 1101, at [40], per Lord Hoffmann.

42 Re Sigma Finance Corp (in administration) [2009] UKSC 2; [2010] 1 All E.R. 571, at [37].

43 Cherry Tree Ltd. v Landmain Ltd. [2012] EWCA Civ 736; [2013] Ch. 305.

44 Arden L.J., dissenting, applied ICS in a liberal manner: ibid., at paras. [20]–[84].

45 Ibid., at paras. [124]–[125].

46 Ibid., at para. [125].

47 E.g. ICS principle 5: see text to note 7 above.

48 See e.g. the discussion in Ardagh Group SA [2013] EWCA Civ 900; [2014] S.T.C. 26, at [50]–[63], per Etherton C.; at [66], per Underhill L.J.

49 Countess of Shelburne v Earl of Inchiquin (1784) 1 Bro.C.C. 338, at [341], per Lord Thurlow L.C.; and see Marquis Townshed v Stangroom (1801) 6 Ves. 328, 334; Lake v Lake [1989] S.T.C. 865, 869. See also F. Dawson, “Interpretation and Rectification of Written Agreements in the Commercial Court” (2015) 131 L.Q.R. 344, 347–48.

50 See e.g. James Hay Pension Trustees Ltd. v Kean Hird [2005] EWHC (Ch) 1093, at [81].

51 Performance Industries Ltd. v Sylvan Lake Golf & Tennis Club [2002] 1 S.C.R. 678, 693.

52 Carmichael v National Power plc [1999] 1 W.L.R. 2042, 2048–49; see further Lord Devlin, Trial by Jury (London 1956), 97–98. In Thorner v Majors [2009] UKHL 18; [2009] 1 W.L.R. 776, at [82], Lord Neuberger expressed support for the “illuminating analysis” of Lord Hoffmann in Carmichael.

53 In Deeny v Gooda Walker Ltd. [1996] 1 W.L.R. 426 (HL) 435, Lord Hoffmann said: “No case on the construction of one document is authority on the construction of another, even if the words are very similar.” See also BCCI v Ali [2001] UKHL 8; [2002] 1 A.C. 251, at [51]; Schuler v Wickman [1974] A.C. 235, 256, per Lord Morris.

54 See e.g. Pioneer Shipping Ltd. v BTP Tioxide Ltd. (The Nema) (No.2) [1982] A.C. 724, 737, per Lord Diplock.

55 Zurich Insurance (Singapore) Pte Ltd. v B-Gold Design & Construction Pte Ltd. [2008] 3 S.L.R. 1029; [2008] SGCA 27, at [132].

56 Sattva Capital Corporation 2014 SCC 53; (2014) 373 D.L.R. (4th) 393, at [50], per Rothstein J.

57 See also Re Sigma [2009] UKSC 2; [2010] 1 All E.R. 571, at [40], per Lord Walker.

58 National Merchant Buying Society Ltd. v Bellamy [2013] EWCA Civ 452; [2013] 2 All E.R. (Comm) 674, at [39], per Rimer L.J.

59 In England alone, post-ICS, see e.g. BCCI v Ali; The Starsin [2003] UKHL 12; [2004] 1 A.C. 715; Chartbrook; Re Sigma Finance Corp (in administration) [2009] UKSC 2; [2010] 1 All E.R. 571; Multi-Link Leisure Developments Ltd. [2010] UKSC 47; [2011] 1 All E.R. 175; Rainy Sky SA [2011] UKSC 50; [2011] 1 W.L.R. 2900; Lloyds TSB Foundation for Scotland [2013] UKSC 3; [2013] 1 W.L.R. 366. In TAEL One Partners Ltd. v Morgan Stanley & Co. International Plc [2015] UKSC 12, the Supreme Court considered a term in the Loan Market Association standard terms and conditions, and recognised that “[t]here is no dispute as to the relevant legal principles” (at [1]).

60 Giving the 2015 Keating Lecture, called “The Contribution of Construction Cases to the Common Law”, on 25 March 2015, Lord Dyson M.R. commented: “It is extraordinary how many cases are still being reported in the law reports in the 21st century on how to interpret a contract. I cannot help thinking that the great Lord Mansfield, who was perhaps the founding father of modern commercial law, would have been disappointed and probably astounded too.”

61 The Commissioners of Inland Revenue v Rafael [1935] A.C. 96, 143. See also Wright v Goff (1856) 22 Beav. 207; Fowler v Fowler (1859) 4 De G&J 250; Agip SpA v Navgazione Alta Italia SpA [1984] 1 Lloyd's Rep 353; Munt v Beasley [2006] EWCA Civ 370; L. Bromley, “Rectification in Equity” (1971) 87 L.Q.R. 532; Dawson, “Interpretation and Rectification”.

62 See section IV below.

63 Chartbrook Ltd. [2009] UKHL 38; [2009] 1 A.C. 1101, at [48]–[66].

64 I.C.F. Spry, Equitable Remedies, 9th ed. (London 2014), 630.

65 As put by Tuckey L.J. in the Court of Appeal: Chartbrook Ltd. v Persimmon Homes Ltd. [2008] EWCA Civ 183; [2008] 2 All E.R. (Comm) 387, at [184].

66 See e.g. D. McLauchlan, “Chartbrook Ltd. v Persimmon Homes Ltd.: Commonsense Principles of Interpretation and Rectification?” (2010) 127 L.Q.R. 8; P. Davies, “Finding the Limits of Contractual Interpretation” [2009] LMCLQ 420.

67 Indeed, this appears to have been favoured by Baroness Hale: Chartbrook Ltd. [2009] UKHL 38; [2009] 1 A.C. 1101, at [100].

68 Ibid., at para. [66].

69 Bromley, “Rectification in Equity”; Ryledar Pty Ltd. [2007] NSWCA 65; (2007) 69 N.S.W.L.R. 603.

70 Admittedly, this finding in itself was perhaps dubious: see e.g. [2008] EWCA Civ 183; [2008] 2 All E.R. (Comm) 387, at [163]–[169], per Lawrence Collins L.J.; and Lord Hoffmann in the House of Lords at [55].

71 For unilateral mistakes, see section IV below. However, in Kowloon Development Finance Ltd. v Pendex Industries Ltd. [2013] HKCFA 35, at [22], Lord Hoffmann N.P.J. said: “a party might find that, as a result of rectification on grounds of mutual mistake, he is bound by a contract which is not only different from the terms of the final document but is one which, subjectively, he never intended to agree to”. This has been criticised as an “extreme view, quite removed from authority”: J. Heydon, M. Leeming, and P. Turner, Meagher, Gummow & Lehane's Equity: Doctrines & Remedies, 5th ed. (LexisNexis, 2014), at para [27-060].

72 See e.g. Nugee, “Rectification”.

73 Buxton, “‘Construction’ and Rectification after Chartbrook”, p. 261.

74 Britoil plc v Hunt Overseas Oil Inc. [1994] C.L.C. 561, per Hobhouse and Glidewell L.JJ.; Hoffmann L.J. dissenting.

75 Chartbrook [2009] UKSC 2; [2010] 1 All E.R. 571, at [63].

76 Lord Toulson, “Does Rectification Require Rectifying?”.

77 Daventry District Council [2011] EWCA Civ 1153; [2012] 1 W.L.R. 1333.

78 [2010] EWHC 1935.

79 For critical comment, see McLauchlan, “Refining Rectification”; P. Davies, “Rectifying the Course of Rectification” (2012) 75 M.L.R. 387.

80 As was also the case in Chartbrook – see note 70 above.

81 Daventry District Council [2011] EWCA Civ 1153; [2012] 1 W.L.R. 1333, at [80], rephrasing a statement by Peter Gibson L.J. in Swainland Builders Ltd. v Freehold Properties Ltd. [2002] EWCA Civ 560; [2002] 2 E.G.L.R. 71. This test appears to have been supported by all three judges in the Court of Appeal.

82 E.g. Daventry District Council [2011] EWCA Civ 1153; [2012] 1 W.L.R. 1333, at [17], per Toulson L.J.; at [213], per Lord Neuberger M.R.

83 e.g. ibid., at para. [111], per Etherton L.J.

84 Etherton L.J. commented, at [104], that “Our different judgments and conclusions in the present case reflect significant differences of view about the way the objective test should be applied on the facts of this case”.

85 Surgicraft Ltd. v Paradigm Biodevices Inc [2010] EWHC 1291 (Ch).

86 The result of the case based on common mistake is unsatisfactory; for unilateral mistake, see section IV below.

87 M. Smith, “Rectification of Contracts for Common Mistake, Joscelyne v Nissen and Subjective States of Mind” (2007) 123 L.Q.R. 116; D. McLauchlan, “The ‘Drastic’ Remedy of Rectification for Unilateral Mistake” (2008) 124 L.Q.R. 608.

88 Smith, “Rectification of Contracts”, pp. 130–32.

89 Ibid., at p. 130.

90 Performance Industries Ltd. [2002] 1 SCR 678, 703, per Binne J.: “It is undoubtedly true that courts ought to hold commercial entities to a reasonable level of due diligence in documenting their transactions. Otherwise, written agreements will lose their utility and commercial life will suffer. Rectification should not become a belated substitute for due diligence.”

91 Indeed, this was the situation in Daventry: see further Davies, “Rectifying the Course of Rectification”, pp. 413–14.

92 Smith, “Rectification of Contracts”, p. 131.

93 Admittedly, the intentions of the latter might become relevant through the generally applicable principles of corporate attribution: Meridian Global Funds Management Asia Ltd. v Securities Commission [1995] 2 A.C. 500 (PC).

94 Smith, “Rectification of Contracts”, p. 131.

95 It is suggested that an outward expression of accord is of practical importance in helping to prove a subjective intention; it has been said that “that the evidence of subjective intention is to some degree viewed through an objective lens”: Heydon et al., Meagher, Gummow & Lehane's Equity, at para [27-055]. Cf. Hodge, Rectification, para. 3–71: “It is suggested that the insistence, in Ryledar v Euphoric, upon the need for the parties’ subjective intention to be ‘disclosed’ in some manner before it can count as a relevant common intention imposes an unnecessary, and undesirable, fetter upon the ability of a court to grant the equitable remedy of rectification.”

96 See section IV below.

97 Smith, “Rectification of Contracts”, pp. 128–29.

98 Chartbrook Ltd. [2009] UKHL 38; [2009] 1 A.C. 1101, at [57]–[66].

99 Bromley, “Rectification in Equity”, p. 537.

100 Spry, Equitable Remedies, p. 635. In a footnote to the text here quoted, the writer went on to snipe: “Lord Hoffmann is widely regarded as a distinguished commercial lawyer, but it may be thought that he has not demonstrated the same understanding of equity as have many other members of the House of Lords.”

101 Daventry District Council [2011] EWCA Civ 1153; [2012] 1 W.L.R. 1333, at [78], per Etherton L.J.

102 It may be that, where the written document is simply meant to record a bargain which has already been agreed, but due to a mistake fails to do so, the parties’ subjective intentions are not crucial because rectification in such circumstances is a form of specific performance of the concluded accord. This can explain the result in George Cohen Sons & Co. Ltd. v Docks and Inland Waterways Executive (1950) 84 Lloyd's Rep 97, which was relied upon by Lord Hoffmann in Chartbrook Ltd. [2009] UKHL 38; [2009] 1 A.C. 1101, at [62]: see Britoil plc [1994] C.L.C. 561, 571, per Hobhouse L.J.; J. Ruddell, “Common Intention and Rectification for Common Mistake” [2014] L.M.C.L.Q. 48, 57–60. But much more common is the situation such as that in Chartbrook Ltd. and Daventry where the document is the bargain, and all negotiations prior to signing the written document are understood to be “subject to a written contract”.

103 Codelfa Construction Pty Ltd. (1982) 149 C.L.R. 337, 346, per Mason J.

104 Ryledar Pty Ltd. [2007] NSWCA 65; (2007) 69 N.S.W.L.R. 603.

105 See in particular [176]–[189], per Tobais J.A. and [267]–[316], per Campbell J.A. (Mason P. agreed with both judgments).

106 Ryledar Pty Ltd. [2007] NSWCA 65; (2007) 69 N.S.W.L.R. 603, at [258]; see also Masterton Homes Pty Ltd. v Palm Assets Pty Ltd. [2009] NSWCA 234, at [107].

107 [2007] HCA Trans 698, November 16, 2007.

108 It has been followed in Hong Kong (by Lord Hoffmann N.P.J.): Kowloon Development Finance Ltd. [2013] HKCFA 35. However, the subjective approach still seems to be preferred in New Zealand: Pernod Ricard New Zealand Ltd. v Lion-Beer, Spirits & Wine (NZ) Ltd. [2012] NZHC 2801. The situation is unclear in Canada: Performance Industries Ltd. [2002] 1 S.C.R. 678, 692, demands sufficiently clear evidence such that the court is not left to speculate about the nature of the parties’ unexpressed intentions.

109 See e.g. J. Steyn, “Interpretation: Legal Texts and their Landscape”, ch. 5, in B.S. Markesinis (ed.), The Clifford Chance Millennium Lectures; The Coming Together of the Common Law and the Civil law (Oxford 2000).

110 Crossco No.4 Unlimited [2011] EWHC 803 (Ch), at [253] (Morgan J.); Tartsinis [2015] EWHC 57 (Comm), at [90]–[99], per Leggatt J. See also e.g. J. McGhee (ed.), Snell's Equity, 33rd ed. (London 2014), para. 16–015; J. Cartwright, Misrepresentation, Mistake and Non-Disclosure, 3rd ed. (London 2012), 13–40; J. Beatson, A. Burrows, and J. Cartwright, Anson's Law of Contract (Oxford 2010), 263.

111 Buxton, “‘Construction’ and Rectification after Chartbrook”; Lewison, “If It Ain't Broke, Don't Fix It”, p. 127; Lord Toulson, “Does Rectification Require Rectifying?”; Patten, “Does the Law Need to Be Rectified?”; Morgan, “Rectification”; Legatt, “Making Sense of Contracts”, p. 464. See also Nugee, “Rectification”. Cf. Etherton, “Contract Formation”.

112 In particular Britoil, considered at text to notes 74–76 above.

113 Lord Toulson, “Does Rectification Require Rectifying?”. In Daventry District Council [2011] EWCA Civ 1153; [2012] 1 W.L.R. 1333, at [180], Toulson L.J. had said that “it would be a bold course” not to follow the “considered unanimous opinion of the House of Lords”.

114 Tartsinis [2015] EWHC 57 (Comm), at [99].

115 Kowloon Development Finance Ltd. [2013] HKCFA 35, at [19], per Lord Hoffmann N.P.J.

116 Daventry District Council [2011] EWCA Civ 1153; [2012] 1 W.L.R. 1333, at [185].

117 Ibid., at para. [225].

118 See also e.g. Tartsinis [2015] EWHC 57 (Comm), at [97], per Leggatt J.

119 Indeed, this might explain why the claim for rectification in Ryledar failed.

120 Kowloon Development Finance Ltd. [2013] HKCFA 35.

121 Ibid., at para. [20].

122 See e.g. McLauchlan, “The ‘Drastic’ Remedy”.

123 George Wimpey UK Ltd. v VI Construction Ltd. [2005] EWCA Civ 77; [2005] BLR 135, at [75], per Blackburne J.

124 Agip SpA [1984] 1 Lloyd's Rep 353, 365, per Slade L.J. George Wimpey UK Ltd. [2005] EWCA Civ 77; [2005] B.L.R. 135, at [75]. See also e.g. A Roberts & Co. Ltd. v Leicestershire CC [1961] Ch. 555; Littman v Aspen Oil (Broking) Ltd. [2005] EWCA Civ 1579; [2006] 2 P. & C.R. 2.

125 A Roberts & Co. Ltd. [1961] Ch. 555; Thomas Bates v Wyndham's [1981] 1 All E.R. 1077; Commission for New Towns v Cooper [1995] Ch. 259.

126 Daventry District Council [2011] EWCA Civ 1153; [2012] 1 W.L.R. 1333, at [97]. Etherton L.J. was prepared to accept, at [95], that the defendant's knowledge of the claimant's mistake must fall within one of the first three categories set out by Peter Gibson J. in Baden v Societe Generale pour Favoriser le Developpement du Commerce et de l'Industrie en France SA (Note) [1993] 1 W.L.R. 509: (1) actual knowledge; (2) wilfully shutting one's eyes to the obvious; and (3) wilfully and recklessly failing to make such inquiries as an honest and reasonable man would make. However, Toulson L.J. was “not sure that the legal principle is or should be so rigid”: Daventry District Council [2011] EWCA Civ 1153; [2012] 1 W.L.R. 1333, at [184].

127 Ibid., at paras. [173]–[178].

128 D. McLauchlan, “Commonsense Principles of Interpretation and Rectification?” (2010) 126 L.Q.R. 8; See also McLauchlan, “The ‘Drastic’ Remedy”.

129 As Hodge has observed, the traditional, subjective approach ought to be maintained, since “[g]ood reason must be demonstrated before holding a contracting party to terms which differ, not only from those which he subjectively intended, but also from those to which he objectively assented by his conduct in signing a document which records those terms”: Hodge, Rectification, para. 4–22.

130 This appears to have been followed in Australia: See e.g. Taylor v Johnson (1983) 151 C.L.R. 422, 431; Leibler v Air New Zealand Ltd. [1999] 1 V.R. 1; Sande v Medsara [2004] NSWSC 147; DSE (Holdings) Pty Ltd. v InterTAN Inc. [2004] FCA 1159; and International Advisor Systems Pty Ltd. v XYYX Pty Ltd. [2008] NSWSC 2, cited by McLauchlan, “The ‘Drastic’ Remedy”, p. 636.

131 Performance Industries Ltd. [2002] 1 SCR 678, 695. See also McLauchlan, “The ‘Drastic’ Remedy”, p. 695.

132 McCamus, The Law of Contracts, p. 593.

133 Fraser v Houston (2006) 51 B.C.L.R. (4th) 82, at [42]. Cf. Downtown King West Development Corp v Massey Ferguson Industries Ltd. (1996) 28 O.R. (3d) 327; McLauchlan, “The ‘Drastic’ Remedy”, pp. 637–39.