Court of Appeal finds that deleted words may be used as an aid to construction.
Although the Court of Appeal emphasised in this case, that care must be taken when drawing inferences from deleted text, as deletions can be made for a range of reasons and are not always indicative of an agreed stance between the parties, the Court was willing to look at them here, to assist in interpreting the parties' contract.
The appellant, Mr Atulkumar Parekh, sought a declaration that his individual voluntary arrangement (IVA) should be set aside. His central argument was that the IVA was conditional on the acceptance of a simultaneous IVA relating to his wife, Mrs Parekh (which was ultimately rejected by Mrs Parekh's creditors). Clause 4.3 of the proposal submitted for approval by Mr Parekh's creditors stated: "the acceptance of my IVA is conditional upon the acceptance of the arrangement for my wife/husband, following acceptance the estates shall be combined for dividend purposes and treated as one." However the proposal submitted actually contained a number of modifications, set out in a separate document. In that document, the above clause was expressly substituted as follows:
"Clause 4.3 is to be substituted with 'I agree to pay the supervisor for the benefit of the creditors not less than £230 per month for the duration of the IVA."
A number of provisions in the proposal remained unaffected by the modifications. The question for the Court of Appeal was whether recourse could be had to the deleted text and what inference, if any, could be drawn from it. The judge at first instance found that the fact that the proposal was drafted first, and the modifications drafted later, could not be ignored and the interdependence of the two IVAs was therefore broken by the modification.
The Court of Appeal explained that deleted words in a printed form may resolve the ambiguity of neighbouring paragraphs. Secondly, that if the fact of the deletion shows what it is that the parties did not agree and there is ambiguity in the words that remain, "then the deleted provision may be an aid to construction, albeit one that must be used with care."
Here, the Court took the view that the IVA proposal (and modifications) were ambiguous over whether the IVA was conditional upon approval of Mrs Parekh's IVA being approved. The Court stated that, "Faced with that level of ambiguity, it is in my view entirely legitimate to have regard to what the Modification removed from the Proposal, by the substitution of a new clause 4.3 for the old. Plainly, the words in the Modification "clause 4.3 is to be substituted with..." mean that the whole of the old clause 4.3 is substituted. The words of conditionality are removed altogether."
In light of the Court's interpretation of the meaning of the existing provisions (with the assistance of the deletion), the Court concluded that the requirement of conditionality had been removed and therefore that Mr Parekh's argument for having the IVA set aside failed.