The Court rectified a lease on the basis that where there was inconsistency between the printed terms of a template lease and the handwritten terms, more weight should be given to the hand-written components as these required the particular attention of the drafter. This case illustrates the importance of taking care when using template or precedent documents to ensure that the agreed terms are accurately reflected and that any necessary amendments are made to the template or precedent document.

This case arose out of some leases and related security documentation under which W & K Holdings (NSW) Pty Limited (W & K Holdings) leased machinery and equipment from Ms Mayo. The lease documentation was prepared using a previous lease as a template and was typed except for dates, the interest rate percentage and all numerical figures (including rental payments, GST bank fees, rental frequency and the cost of the property) which were handwritten. The Court was required to construe the applicable interest rate in circumstances where the lease template contained the words ‘diminishing value’ representing a reducible interest rate basis, but the handwritten monthly payment figures were calculated on a flat rate interest basis.

Sackar J found that, on a proper construction, the leases provided for interest to be charged on a flat rate on the basis that:

  • where there is an inconsistency in a contract between printed clauses and handwritten clauses, more weight should be given to the hand-written components as these required the particular attention of the drafter; and
  • ‘diminishing value’ was used in the leases to reflect other tax related concepts, not the correct basis for which interest was charged.

However, Sackar J was prepared to rectify the leases and impose a reducible rate on the basis that the facts suggested that Ms Mayo had an actual intention to transact on a reducible rate basis. Ms Mayo had no understanding at the time of formation of contract about the difference between charging interest on a flat basis and a reducible basis and believed interest would be charged in a similar way to her home loan (which was a reducible rate).

See the case.