Claimants seeking rectification of sublease granted to defendant – Court ordering summary judgment in favour of defendant – Claimants appealing – Whether rectification could be afforded where solicitor responsible for preparation of the text instructed by both parties – Appeal allowed and leave to amend statement of claim permitted
In 1983 the defendant, Rutland House Textiles Ltd (RHT) entered into a development agreement with Nottingham City Council. It was agreed that RHT would enter into a lease with the council when occupation of the developed premises began. It was decided that a pension scheme, set up by RHT for the benefit of Stephen and David Mace (the first and third claimants), would fund the development, take a ground lease from the council and sublet the premises to RHT at a commercial rent. Accordingly, the council granted a lease of the site to the pension scheme trustees for a period of 125 years from 3 May 1983 at a rent of £7,500 pa. The following day, the pension scheme granted a sublease to RHT, also for a period of 125 years from 3 May 1983, at an annual rent of £20,000. One solicitor acted for both parties and drafted the head lease and the sublease.
In 1998 RHT purchased the freehold of the site from the council and contended that, by operation of law, the pension scheme’s interest had been merged with its interest. The claimants alleged that there was a common mistake and sought rectification of the sublease. RHT applied for summary judgment and the court found that the claimants had failed to show an arguable case.
The claimants appealed against that decision, and also applied for leave to amend the statement of claim to allege that RHT was estopped from denying that a relationship of landlord and tenant existed between them, or that a proprietary estoppel had arisen out of the pension scheme’s expenditure on the site. The principal issue was whether there could be rectification where the person responsible for preparation of the text of the lease was instructed by both parties.
Held: The appeal and application to amend the statement of claim were allowed.
There was no difference in principle between a case in which a different person was responsible for preparing the text for each party and a case where only one person had that responsibility for both. It may be more difficult to find “outward expression” in a case where one person did the drafting for both parties; however, that would be an evidential difficulty rather than one of principle. The fact that there was no “outward expression of accord” in such a case should not be fatal, provided that there was convincing proof of the agreement or common intention. There was no reason of principle that would necessarily defeat the claim for rectification. The claimants, therefore, had a real prospect of success at trial: Joscelyne v Nissen [1970] 2 QB 86 considered. Furthermore, it was arguable that the claimants would be able to support a claim for the existence of estoppel. The statement of claim was to be amended.
Colette Wilkins (instructed by Harvey Ingram Owston, of Leicester) appeared for the claimants; Thomas Dumont (instructed by Browne Jacobson) appeared for the defendant.
Sarah Mills, barrister
