Topic 5 (Rectification): Case Law Flashcards
Irish Life Assurance Company Ltd v Dublin Land Securities Ltd [1989] IR 253:
KEY TEST FOR RECTIFICATION
- the party seeking rectification must establish a common continuing intention in relation to a particular provision of the contract agreed between the parties up to the point of execution of the formal contract;
- That it was not necessary that there be a legally binding agreement between the parties in relation to a particular provision antecedent to the contract or instrument which it is sought to rectify, provided that prior accord in relation to that provision has been outwardly expressed or communicated. Oral agreements can rectify a written agreement
- That the party seeking rectification of a contract must establish by convincing proof that the instrument does not reflect the common intention of the parties, especially where long negotiations have taken place between the parties, both of whom have taken legal advice during such negotiations. Lots of evidence
- That the party seeking rectification of a contract must be able to show what the common intention of the parties was. Witnesses, memory etc
Leopardstown Club Ltd v Templeville Developments Ltd [2010] IEHC 152
Plaintiff wanted to include a parking site in the premises, wanted to rectify the definition of the site, whether it has a car park or not
Intention was to include the car park
Rectification was granted.
This represented a shift from the past where a valid and enforceable contract antecedent to the instrument sought to be rectified was required.
“These make clear that the basic requirements for rectification for common mistake are as follows:
a common intention evidenced by an outward expression of accord
relating to the particular matter in respect of which rectification is sought
continuing up to the date of execution of the document which it is sought to rectify; and
which is not reflected in this document.
Monaghan County Council v Vaughan [1948] IR 306
COMMON CONTINUING INTENTION
Rectification for common mistake granted
Plaintiff owned a ruined building which they wanted demolished;
Advertised in a newspaper inviting tenders for the work and accepted in writing a written tender submitted by the defendant;
Plaintiff intended the defendant to pay the plaintiff the sum of £1,200 in return for the defendant being granted a right of disposal of material removed;
Agreement was ambiguous, defendant claimed THEY were to be paid £1,200 by the plaintiff;
Rectification granted where court made clear the defendant had to pay the sum to the plaintiff on the basis it was ORALLY AGREED between the parties that the defendant should pay the sum;
Irish Life Assurance Company Ltd v Dublin Land Securities Ltd [1989] IR 253
CONVINCING PROOF
Example of rectification being refused due to a lack of PROOF OF common continuing intention;
Plaintiff intended to exclude CPO land in a sale to the defendant, due to mix-up this was not done, communicated to agent, not communicated to defendant directly
What was communicated was too imprecise and was not directly communicated to defendant
Defendant was entitled to assume that the CPO land was included as this would have been discussed prior
Ferguson v Merchant Banking Ltd [1993] 3 IR 382
Refusal of rectification due to lack of precision as to common intention;
Plaintiff looks for specific performance of contract for sale of land;
Defendant challenges as claims it was never their intention to include a certain development in the sale;
Judge Murphy refused rectification and granted specific performance on the basis that a mistake had been made by the liquidator/vendor who was unaware of this mistake but the contract was too wide to be rectified;
Refusal of rectification due to lack of precision as to common intention
Refusal of rectification, lack of clarity
Must be abel to suggest what the intended contract will look like
Huge changes to contracts is unlikely to be granted rectification
Precise prior agreement must be brought before the court
Monaghan County Council v Vaughan [1948] IR 306
COMMON MISTAKE
County Council demolition case;
Justice Dixon held the following on common mistake:
How to asses if a mistake was common or not - objective test
This is not ideal - not easy to see what the parties thought themselves
Debated between English and Irish case law
Objective test - look from the outside
McD v McD [1993] ILRM 717
COMMON MISTAKE
Plaintiff and defendant signed a settlement in relation to court proceedings regarding custody and maintenance of their children;
Plaintiff sought rectification on the basis that they alleged the husband would pay all legal fees;
Rectification was refused – insufficient evidence of a common intention and the evidence provided was too imprecise;
Evidence was too imprecise, cannot show common intention
Agreement - no reference to costs, both confused about the prior agreement - no common intention
Could not show what should be in the contract
Leopardstown Club Ltd v Templeville Developments Ltd [2010] IEHC 152
COMMON MISTAKE
Irish courts adopt an objective test of common intention where rectification is sought for common mistake;
Justice Edwards stated the following to support the objective test approach:
“The requirement, that common intention be determined objectively, means that a subjective change of mind on the part of one party, following a common expression of outward accord, cannot be regarded, unless clearly communicated in a manner identifiable to the reasonable observer,”
Frederick E. Rose (London) Ltd v W.H. Pim Junior & Co. Ltd [1953] 2 QB 450
COMMON MISTAKE + OBJECTIVE TEST (UK)
Mistake of the product that is being sold - plaintiff is claiming they were both mistaken about the type of bean
Objective test applied: there was not a mistake, the oral agreement spoke about horse beans, they did not clarify what this was.
Objectively speaking they agreed to provide beans and they didn’t discuss what those beans were
Highlights how rectification will not be granted where parties are merely mistaken as to the meaning of a contract.
Rectification for common mistake can only be sought by the original parties to a contract;
Do not look to the inner minds but the spoken words
Stricter approach - but easier approach to apply
Lac Minerals Ltd v Chevron Mineral Corporation of Ireland [1995] 1 ILRM 161
COMMON MISTAKE + OBJECTIVE TEST (IRELAND)
Case concerned an agreement to exploit mineral rights in Tipperary;
Two parties could assign their rights to a third party once a right of pre-emption was given;
Period was mistakenly recorded as 60 days rather than 45 as it was recorded in other documents;
Plaintiff entered into an agreement to acquire the first defendants interests;
Plaintiff sought to rectify the agreement arguing that it should have referred to 45 days;
Rectification was not granted as there was no nexus between the person claiming rectification and the document over which rectification was being sought with the parties to the action in which rectification is sought having to be privy by the same mistake in such a way that would be unconscionable for the defendant to rely on the document which erroneously recorded the agreement;
Lac Minerals Ltd v Chevron Mineral Corporation of Ireland [1995] 1 ILRM 161
Third parties is almost impossible for them to rely on rectification
Clark v Girdwood (1877) 7 Ch. D. 9:
UNILATERAL MISTAKE
Plaintiff, a widow with children who owned property left by her late husband, married and her new husband prepared marriage articles that limited the plaintiff’s property to her intended husband for his life;
Plaintiff sought to rectify the settlement against the husband and the solicitor who prepared the settlement;
Rectification was granted as the limitations were contrary to the intention of the plaintiff as the husband was bound to have such a contract prepared as the Court would sanction and such a contract would give the wife the first life estate in her own property;
Defendant was aware that the plaintiff was not aware
Irish Life Assurance Co. Ltd v Dublin Land Securities Ltd
UNILATERAL MISTAKE
Irelands approach to unilateral mistake outlined in both the High Court and Supreme Court;
In the High Court [1986] IR 332 Justice Kenny noted the following:
“That notwithstanding the absence of mutual mistake, a court could nevertheless order rectification of a contract where there had been a unilateral mistake and it would be inequitable in the circumstances to allow the party against whom the relief is sought to retain a benefit derived from the mistake.”
What is the standard to meet fraud - here it does not have to be as high as the standard of fraud - sharp practice will be granted rectification for unilateral mistake
Riverlate Properties Ltd. v. Paul [1975] 1 Ch. 133 - sharp practice (high standard)
UNILATERAL MISTAKE
Plaintiff mistaken if they are liable for the outside of the premisses
Looking to have the exterior of the house included in the agreement
If you cannot demonstrate fraud you must demonstrate sharp practice, they must demonstrate pulling the wool over they eyes of the other party
Claimed unilateral mistake which was dismissed for a lack of sharp practice;
Thomas Bates & Son Ltd v Wyndham’s (Lingerie) Ltd [1981] 1 WLR 505
UNILATERAL MISTAKE
Case concerned a tenant who was aware that the plaintiff landlord had failed to include an arbitration provision in the rent review clause but did not raise this issue;
Plaintiff realised omission only when rent review was needed;
Arbitration clause was inserted by way of rectification;
Court focused on “equity of the position” of the case rather than on the presence of “sharp practice”;
In assessing the decision in Irish Life Assurance Co. Ltd v Dublin Land Securities Ltd and comparing it to the UK decisions in Riverlate and Bates, clear Ireland had adopted the lower standard for granting rectification;
Inequitable outcome rather than presence of sharp practice/fraud required to obtain rectification in Ireland.
Equity of the position - a fairness assessment rather than sharp practice
Looking at the case globally, it is not equitable to allow the agreement to continue where one side was aware of something and another was not
Lower standard than the UK
One party is mistaken and the other party is aware of the mistake and they say nothing
