Sale of land – Overage – Rectification – Appellant purchasing freehold property from respondent – Further overage payment due in event of resale or grant of relevant planning permission – Appellant claiming rectification of overage abatement provision – Judge refusing to rectify agreement finding, on facts and evidence, effect to be given to undelivered side letter containing varied abatement provision – Whether judge erring in law – Whether appellant entitled to adduce fresh evidence – Application refused — Appeal dismissed
The appellant purchased from the respondent for £13.5m the freehold of an office block, of which it was the tenant. The sale agreement provided that the respondent would receive an overage payment in the event that the property was resold or the vendor obtained planning permission for residential development. It was anticipated that the payment would amount to £2.5m. At the time of the sale, the appellant was in arrears of rent, which, under the terms of the sale agreement, were to be paid off by six equal monthly instalments.
A dispute arose concerning the overage provisions. The appellant claimed that a clause included in an earlier draft of the sale agreement, providing that it should be released from the obligation to pay overage if it paid all sums outstanding and due to the vendor before the latter applied for planning permission, had been wrongly omitted from the final version and that the sale agreement should be rectified on the grounds of either common or unilateral mistake. It alleged that the respondent had removed the clause by conduct amounting to sharp practice and that the appellant had been unaware of its removal. The respondent maintained that the relevant clause had been removed by mutual consent and a broadly equivalent clause had been included in a side letter by agreement. Since the appellant had not paid the outstanding sums by the agreed date, the respondent was entitled to the benefit of overage.
The judge found that the sale agreement had correctly recorded what the parties had agreed and that the omission of an abatement term from the sale agreement had not resulted from any trick or sharp practice. The parties had intended was that the provision for the abatement of overage would be to be included in a side letter instead of the main sale agreement. In reaching that conclusion, he had relied on a contemporaneous letter from the respondent to the appellant with details of the new abatement clause. Thus, the claim for rectification failed: [2008] EWHC 1221 (Ch); [2008] PLSCS 158.
The appellant appealed and applied to adduce fresh evidence to show that the letter had been created after the start of the litigation and could not be genuine.
Held: The application was refused; the appeal was dismissed.
(1) The appellant had to obtain the court’s permission to adduce fresh evidence on the appeal and to make consequential amendments to its grounds of appeal pursuant to CPR 52.11(2). That permission should be granted only if, in accordance with the overriding objective, it was just to admit evidence on appeal that had not been produced at trial. The party introducing new evidence had to have a good reason for not obtaining it in time to use at the trial. Once the trial was over, it would be too late to produce evidence to an appellate court, which was not equipped to try or to retry cases. In the exercise of its discretion to admit fresh evidence the court had to consider carefully all the relevant factors, such as whether: (i) the evidence could, by reasonable efforts, have been obtained for disclosure at the trial; (ii) it was credible; and (iii) if given, it would probably have an important influence on the outcome of the case.
The instant case was not an application to adduce fresh evidence, which could not have been obtained by reasonable efforts for use at the trial. It was an attempt to introduce evidence that had been available to the appellant before the trial, although not in the same finished form as submitted in the instant proceedings. The evidence available or reasonably available to the appellant at the time of the trial was sufficient to justify attempts to introduce it at trial by adducing it as hearsay or by seeking an order compelling the attendance of a witness to give evidence. No such attempts had been made and it was too late to repair those omissions.
(2) On the substantive appeal, the trial judge had been better placed than the Court of Appeal to find the facts, even by inference from contemporaneous documents and the inherent probabilities of the case. In making those inferences, a trial judge might be properly influenced by the general views that he had formed concerning the evidence of the parties, the credibility of the witnesses and the probabilities of the case presented by each side. The effect of the incomplete documentation on the judge could not be separated from his experience of sitting through the trial and forming general impressions that would influence his overall assessment of the evidence.
Furthermore, the judge had been entitled to require convincing proof of the case pleaded for rectification and to hold that the appellant had failed to discharge the burden of proving that, by sharp practice, the respondent had removed the abatement provision from the sale agreement. The negotiations had been conducted by businessmen with the benefit of professional legal advice and drafting. The judge had given ample reasons for rejecting the evidence of the appellant’s witnesses about what had been agreed and preferring that provided by the respondent’s witnesses. It followed from his clear findings of fact that the appellant had not established a case of unilateral mistake that would give the court jurisdiction to order rectification.
Michael Crane QC, Robert Hantusch and Tom Carpenter-Leitch (instructed by Zorro Law Ltd) appeared for the appellant; Romie Tager QC and Mark Warwick (instructed by Jeffrey Green Russell) appeared for the respondent.
Eileen O’Grady, barrister
