Rectification is an equitable remedy that is available to the courts when a document contains a mistake. The courts have the power to rectify mutual and unilateral mistakes, but it is much harder to rectify an agreement where only one of the parties was mistaken.
The recent High Court decision in Rowallan Group Ltd v Edgehill Portfolio No 1 Ltd [2007] EWHC 32 (Ch); [2007] PLSCS 9 turned on the reason for a unilateral mistake, which caused an unforeseen reduction in the purchase price of a property following a last-minute amendment to the contract. The change required the seller to make a payment for which the buyer had originally agreed to be responsible. The seller sought rectification of the contract.
Rectification on the grounds of unilateral mistake is a draconian remedy because it imposes on the defendant to the claim a contract that it had not made, and had not intended to make: see George Wimpey UK Ltd (formerly Wimpey Homes Ltd) v VI Construction Ltd (formerly VI Components Ltd) [2005] EWCA Civ 77. Thus, to succeed in rectifying the agreement, the seller needed to show that the buyer: (i) knew or suspected that the seller was making a mistake; (ii) had intended that the seller should be mistaken; and (iii) had deliberately diverted the seller’s attention to prevent the seller from discovering the mistake.
However, the amendment to the contract was unequivocal and, crucially, the matters that had induced the mistake were matters that were never disclosed to the buyer and of which the buyer had not been aware of. Both the seller and its solicitor believed that the contract had been amended to deal with other sums that they thought were due. Absent their knowledge, there was no reason why the buyer could or should have known, or even suspected, that the seller had made a mistake. The buyer was therefore entitled to proceed on the basis that the seller had known and intended exactly what the contract had provided and that the seller should make the payment that it had contracted to make.
The case provides a salutary reminder: the courts will not rectify an agreement merely because one party has been tough and successful, or because the other has been unwise, has missed a point or has failed to appreciate the effect of a particular provision.
Allyson Colby is a property law consultant
