Judge considers whether the test for rectification is an objective one
The test for rectifying a contract is: (1) the parties had a common continuing intention, whether or not amounting to an agreement, in respect of a particular matter in the instrument to be rectified; (2) there was an outward expression of accord; (3) the intention continued at the time of the execution of the instrument sought to be rectified; (4) by mistake, the instrument did not reflect that common intention. The standard of proof required is the civil standard of balance of probability. However, sufficiently strong proof will in practice be needed to counteract the evidence of the parties’ intention displayed by the contract itself.
In this case, Leggatt J opined that “an outward expression of accord” only meant that objectively manifested intentions are required and that a mere coincidence of uncommunicated subjective intentions would not suffice. However, in Chartbrook v Persimmon Homes (see Weekly Update 24/09) the House of Lords (albeit obiter) endorsed a more objective test - ie what would a reasonable observer have understood the terms of the contract to be. Leggatt J said that he had difficulty with that view: “It is one thing to say that a contract should not be rectified just because both parties privately intend it to bear a meaning different from its meaning objectively ascertained. It is quite another thing, however, to say that a contract should be rectified to conform to what a reasonable observer would have understood the parties previously to have agreed, irrespective of the parties’ own understanding”. However, despite his “real misgivings”, Leggatt J said that, had he been required to decide the point (and, on the facts, he wasn’t), he would have been bound to follow the approach endorsed in Chartbrook.